Iran's oil exports will greatly depend on how China will proceed with its crude oil imports from the Islamic Republic, if at all, after the U.S. removed all sanction waivers for Iranian oil customers, IHS Markit said in an analysis on Tuesday.
Despite the U.S. push to drive Iranian oil exports to zero, China is not expected to totally cut off its crude imports from Iran, according to Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade at IHS Markit.
Still, Chinese oil imports from Iran will likely be very low for a long period of time going forward, Katsoulas said.
China's total crude oil imports dropped in May from a monthly record in April, as Chinese refiners drastically reduced Iranian oil imports after the end of the U.S. waivers and as some state refineries were offline for planned maintenance.
Seng Yick Tee, an analyst with Beijing-based consultancy SIA Energy, told Reuters that the key reason for the lower Chinese crude oil imports in May was the sharp drop in imports from Iran as the U.S. ended all sanction waivers for Iranian customers on May 2, including for Iran's biggest oil buyer China.
China has been Iran's ninth biggest oil supplier this year, down from the seventh spot last year, IHS Markit has estimated.
China has criticized the U.S. decision to end the sanction waivers and some Chinese refiners may continue to buy Iranian oil as the U.S.-China trade war deteriorates and Beijing could simply brush off the U.S. sanctions on Iranian oil.
"However, this behaviour will not be the typical one to observe across China, as several companies have already realised how inconvenient it would be to continue purchasing from Iran," IHS Markit's Katsoulas said.
From Iran's point of view, China could be the last hope of keeping Iran's oil production and exports from total collapse, the analyst said, noting that the rest of the world-including Iran's second-largest buyer until recently, India-have stopped oil trade flows from the Islamic Republic.
By Tsvetana Paraskova for Oilprice.com
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