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Iran and China have found a way for China to continue buying Iranian crude and pay for it without risking a U.S. sanction breach, an Iranian official said, as quoted by Fars News.
"A Chinese bank will start its banking exchanges with the Iranian side on December 2," the head of the Iran-China Chamber of Commerce, Asadollah Asgaroladi said, adding "The Chinese side is due to introduce its second bank for exchanges with the Iranian side in a month." Sales of crude will begin next week, Asgaroladi also said.
China had a special bank dedicated to handling payments for Iranian oil during the international sanctions against Tehran earlier this decade, so finding ways around sanctions is hardly new.
The country is Iran’s biggest crude oil buyer and has repeatedly stated it will not suspend imports regardless of sanctions. However, state refiners were reported to have stopped buying Iranian crude ahead of the U.S. sanctions, likely in a bid to score a waiver with Washington because they have exposure to the U.S. financial system and if found to violate the sanctions they would have suffered negative consequences.
Indeed, China was one of the eight major Iranian oil importers that were granted six-month sanction waivers, with Washington allowing it to continue buying Iranian crude at a rate of 360,000 bpd. That’s a lot less than Chinese refiners imported before, but state companies also have rights to production from fields in Iran where Chinese companies have stakes, so they will probably be getting more than that.
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China’s oil imports from Iran increased by 4.1 percent annually to average 631,556 bpd between January and September, and Tehran was the fifth-largest oil supplier to the world’s top oil importer, official Chinese data shows.
After somewhat reduced import volumes in September, China’s oil intake in October and November is seen rebounding, according to trade flow data from S&P Global Platts.
Last month, Iran also sent around 22 million barrels of crude to one of China’s biggest ports, Dalian, according to a Reuters report citing tanker-tracking data. Dalian is a major oil hub in China and Iran has used storage facilities at the port to keep crude during the previous international round of sanctions against Tehran. The usual rate of Iranian crude oil cargoes going into China has been between 1 million and 3 million barrels monthly.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.