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Chinese CNPC Halts Fuel Sales To North Korea

China National Petroleum Corp (CNPC), the main supplier of diesel and gasoline to North Korea, has suspended fuel sales to North Korea because it is worried that it may not receive payments, Reuters reported late on Tuesday, citing three sources.

It was not immediately clear how long the fuel sales suspension would last. North Korea imports all the oil and oil products it consumes—mostly from China—and a prolonged suspension by CNPC would choke out supplies at a time when the international community is increasing pressure on North Korea to stop its nuclear and missile ambitions, and is intensifying checks over Chinese business relations with Pyongyang.

According to a source with direct knowledge of CNPC’s plans who spoke to Reuters, the Chinese corporation had decided to halt fuel sales “over the last month or two” in what was a “commercial decision”.

CNPC typically wants upfront payments for the fuels, while North Korean buyers have not been able to pay for the supplies in recent months, according to the Reuters source.

“It’s no longer worth the risks,” the source said.

Two other sources briefed by Reuters confirmed that CNPC had decided to halt sales of diesel to North Korea, but did not know if the move extended to gasoline sales.

North Korea’s ballistic missile tests and mounting pressure on China to rein in its belligerent neighbor have led to increased speculation this year that Beijing would cut off oil or oil product supplies to Pyongyang.

China said in February that it was suspending until the end of this year all imports of coal from North Korea as part of its effort to implement United Nations Security Council sanctions aimed at stopping the country’s nuclear weapons and ballistic-missile program.

Gas prices in North Korea have jumped on reports that China may be mulling an oil embargo.

Earlier this month, Secretary of State Rex Tillerson said that the U.S. would focus its efforts on shutting off North Korea’s access to crude oil. In this, Washington will seek the assistance of other countries, Tillerson said.

Related: Underperforming Energy Sector May Soon See M&A Wave

Reuters’ sources in China said that there were no signs yet that China was halting crude oil deliveries to North Korea.

Three senior administration officials told Reuters on Tuesday that U.S. President Donald Trump was considering potential trade actions against China over its inaction over North Korea and over bilateral U.S-China trade issues.

By Tsvetana Paraskova for Oilprice.com

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  • Naomi on June 28 2017 said:
    China may lose most favored nation status.

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