Shafaq News / China's oil trade with Iran has stalled as Tehran withholds shipments and demands higher prices from its top client, tightening cheap supply for the world's biggest crude importer, refinery and trade sources said.
The cutback in Iranian oil, which makes up some 10% of China's crude imports and hit a record in October, could support global prices and squeeze profits at Chinese refiners.
The abrupt move, which one industry executive called a "default", could also represent the backfiring of an October U.S. waiver on sanctions of Venezuelan oil, which diverted shipments from the South American producer to the U.S. and India, elevating prices for China as shipments dwindled.
The National Iranian Oil Co, China's commerce ministry and the U.S. Treasury Department did not immediately respond to Reuters requests for comment.
Early last month Iranian sellers told Chinese buyers they were narrowing discounts for December and January deliveries of Iranian Light crude to between $5 and $6 a barrel below dated Brent, five traders who handle the oil or are familiar with the transactions told Reuters.
Those deals had been struck in November at discounts around $10 a barrel, the traders said.
"This is considered as an extensive default and the order to hike prices apparently came from the headquarters in Tehran, as they're holding back supplies also to the intermediaries," a China-based trading executive said.
An executive at a Chinese middleman that procures direct from Iran said the OPEC producer was "holding back some shipments", leading to a "stalemate" between Chinese buyers and Iranian suppliers.
(Reuters)