China To Release Millions Of Barrels Of Imported Oil Stuck At Ports

China will start releasing an estimated 10 million barrels of oil imported from Iran and Venezuela and waiting at ports for weeks amid increased cargo scrutiny, Reuters reported on Wednesday, citing trading sources with knowledge of the matter. 

In April, authorities at China’s Shandong province, home to most of the independent refiners, began inspections of arriving cargoes after finding that some shipments from Iran were mislabeled as bitumen or bitumen mixtures, in an apparent attempt at bypassing the crude oil import quotas China allows and strictly monitors.

The independent refiners in the Shandong province have been the main customers of Iranian and Venezuelan crude oil in recent years, after the U.S. imposed sanctions on the oil exports of both OPEC members, Iran and Venezuela, in 2018 and 2019, respectively.

Currently, most of the stranded oil at Shandong came originally from Iran or Venezuela and has been rebranded as bitumen mixtures from Malaysia to circumvent U.S. sanctions, according to Reuters’ sources.

During a meeting between representatives of independent refiners and customs officials earlier this week, the Shandong customs authorities agreed to resume clearing the imports of those bitumen cargoes that meet some of the key requirements for bitumen mixtures if refiners declare they would use the mixtures for bitumen production only, the trading sources said.

“The unspoken reason for the relaxations was the government was concerned with falling tax revenues and import figures as the economy is already struggling,” a trader who attended the meeting told Reuters.

Bitumen and oil labeled as “other heavy oil” are not subject to the Chinese crude oil import quotas. However, those types of oil are subject to import and consumption taxes in China.

Last month, the authorities in the Shandong province also increased the safety checks on old vessels arriving at the major oil import port of Qingdao, as the number of old oil tankers shipping Russian oil has soared. As of the middle of May, the authorities held some ships more than 20 years old at the port for weeks.

By Charles Kennedy for Oilprice.com

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