Alwaght- China will continue buying Iran's oil despite US sanction threats, Reuters reported saying Chinese buyers of Iranian cruse are starting to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all of their imports.
The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the re-imposition of economic sanctions by the US on the Islamic Republic.
The US withdrew from the nuclear deal signed in 2015, known as JCPOA, between Iran and a group of nations including Russia, China, the US, the UK, France, and Germany. As part of the agreement Iran vowed to limit its nuclear enrichment program and, in return, decades-long economic sanctions against Tehran were to be lifted.
However, on May 8, US President Donald Trump announced that he would abandon the JCPOA. On August 6, Trump ordered all nuclear-related sanctions that were removed under the deal to be reinstated immediately.
The first phase of the unilateral sanctions came into effect a day after Trump’s order, targeting Iran's purchase of US dollars, and trade in gold and other precious metals as well as its automotive sector. A second batch of bans will be re-imposed in November with the aim of curtailing Iran’s oil exports and shipping sectors.
China has said it is opposed to any unilateral sanctions and has defended its commercial ties with Iran.
On August 17, China's Foreign Minister Wang Yi reaffirmed that Beijing would continue its cooperation and relations with the Islamic Republic during a telephone conversation with his Iranian counterpart Mohammad Javad Zarif saying JCPOA is in line with the international community’s “common interest".
"We have openly indicated that we oppose the wrong practices of unilateral sanctions and 'long-arm jurisdiction' in international relations,” the Chinese FM was quoted as saying by state news agency Xinhua.
Insurers, which are mainly US or European based, have already begun winding down their Iranian business to comply with the sanctions. Reuters cited four sources with direct knowledge of the matter as saying that state oil trader Zhuhai Zhenrong Corp and Sinopec Group, Asia’s biggest refiner, have activated a clause in its long-term supply agreements with National Iranian Oil Corp (NIOC) that allows them to use NITC-operated tankers.
The price for the oil under the long-term deals has been changed to a delivered ex-ship basis from the previous free-on-board terms, meaning that Iran will cover all the costs and risks of delivering the crude as well as handling the insurance, the sources said.
“The shift started very recently, and it was almost a simultaneous call from both sides,” said one of the sources, a senior Beijing-based oil executive.
In July, all 17 tankers chartered to carry oil from Iran to China are operated by NITC, according to shipping data on Thomson Reuters Eikon. In June, eight of 19 vessels chartered were Chinese operated.
Last month, those tankers loaded about 23.8 million barrels of crude oil and condensate destined for China, or about 767,000 barrels per day (bpd). In June, the loadings were 19.8 million barrels, or 660,000 bpd.
It typically takes about a month for Iranian crude to reach China.
With the new shipping arrangement, Iranian oil cargoes to China are expected to stay at recent levels through October, said the four sources with knowledge of the tanker changes.