The United States has warned China that it will not turn a blind eye to rising Iranian oil exports to Chinese ports, the Financial Times reported, citing a senior Biden administration official.
According to the report, Washington has not missed the substantial increase in Iranian crude shipments to China. It has reminded Beijing that there are still sanctions in place against the Islamic republic.
“We’ve told the Chinese that we will continue to enforce our sanctions,” the unnamed official told the FT. “There will be no tacit green light.”
Yet the Trump-era sanctions may be waived if Iran and the U.S. make it to the negotiation table.
“Ultimately, our goal is not to enforce the sanctions; it is to get to the point where we lift sanctions and Iran reverses its nuclear steps,” the official told the FT.
China has indeed been ramping up shipments of crude from Iran: from an average of 306,000 bpd last year, this month, China has been taking in some 856,000 bpd of Iranian crude—a 129-percent rise over February.
China’s interest in Iranian oil goes hand in hand with the comprehensive strategic partnership between the two countries. The initiative expects trade between the two countries to reach $600 billion over the next decade. In addition, China’s Belt and Road initiative (BRI) attempts to strengthen regional political, economic, and strategic ties, with a focus on the energy industry.
But Iranian oil is also attractive for a very simple reason: Iran is selling it at a deep discount because of the sanctions. The low price makes Iranian crude attractive for other Asian buyers, too, such as India, which has been on the hunt for alternatives to Middle Eastern OPEC oil because of its high price.
Regarding the sanctions, Iran has demanded that the U.S. first lift sanctions before negotiations on the nuclear deal start. The U.S. wants negotiations first, sanction-lifting later.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Three Commodities Set To Boom As The Global Economy Recovers
- Oil Drops As IEA Dashes Hopes Of Supercycle
- Did Warren Buffett Anticipate A Bull Run In Natural Gas?