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The top Asian oil importers and Iranian oil customers—China, India, Japan, and South Korea—bought in June their lowest combined volume of Iranian oil in seven months, as South Korea slashed Iranian purchases amid returning U.S. sanctions on Tehran.
The four Asian oil importers bought in June a total of 1.45 million bpd from Iran, down by 0.5 percent compared to June 2017, and the lowest combined level since November 2017, according to ship-tracking and government data compiled by Reuters.
Iran’s largest oil customer—China—saw its Iranian imports increase by nearly 2 percent on the year to around 525,000 bpd in June, according to Reuters oil flow data. China is one of Iran’s customers not expected to halt shipments from Tehran when U.S. sanctions kick in later this year.
Indian imports jumped by almost 20 percent on the year in June. Yet, compared to May, when the U.S. said it would re-impose sanctions on Iran, Indian oil refiners reduced their orders for Iranian crude oil in June by 12 percent, India’s Oil Minister Dharmendra Pradhan said in Parliament on Monday.
Some big Indian refiners worry that their access to the U.S. financial system could be cut off if they continue to import Iranian oil, and have started to reduce purchases from Tehran.
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South Korea’s imports from Iran plunged by 41 percent to 183,000 bpd in June compared to June 2017. Starting in July, South Korea is halting Iranian oil imports for the first time since 2012 amid pressure from the United States to discontinue purchases from Iran.
Japan’s imports of Iranian oil increased by 10 percent in June compared to the same month last year, Japan’s trade ministry data showed. Japan, however, is said to be preparing to stop Iranian oil imports to comply with U.S. demands that it completely stop buying crude from Iran.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
The claim that major Asian buyers have slashed Iranian oil imports to 7-month-low is not only inaccurate but it is also plain exaggeration. It transpires that the reduction amounted to merely 725 barrels from 145,000 barrels a day (b/d) to 144,275 b/d. Moreover, this decline could be due to a statistical error.
China’s crude oil imports are on the rise and with the United States intensifying its trade war against China, the Chinese would be more than happy to buy more Iranian crude as a way of retaliating against Washington and also bolstering the petro-yuan. Furthermore, Iran will likely offer significant discounts to China thus enticing it to scoop up ample supplies on the cheap.
In June 2018 India imported 705,000 barrels a day (b/d) of Iranian crude compared with 464,000 b/d in June 2017, a 52% rise. This is not the action of a country planning to comply with US sanctions on Iran.
Japan and South Korea are going to seek a waiver from the US to continue buying Iranian crude and will most probably get it. Even if both of them stop buying Iranian crude completely which is an improbability in itself, China will buy their share.
All in all, total purchase of Iranian crude by top Asian buyers will not decline.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London