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China continued Iran oil imports in July in teeth of US sanctions

China continued Iran oil imports in July in teeth of US sanctions
China continued Iran oil imports in July in teeth of US sanctions

2019-08-08 00:00:00 - Source: Baghdad Post

China

imported Iranian crude oil in July for the second month since a US sanctions

waiver ended, according to research from three data firms, with one estimate

showing some oil entered tanks holding the country’s strategic reserves.

According

to the firms, which track tanker movements, between 4.4 million and 11 million

barrels of Iranian crude were discharged into China last month, or 142,000 to

360,000 barrels per day (bpd). The upper end of that range would mean July

imports still added up to close to half of their year-earlier level despite

sanctions.

The

imports are continuing at a precarious moment in US-China relations: The flow

is hampering US President Donald Trump’s efforts to choke off oil exports vital

to Iran through sanctions, just as tensions rise in the festering US-China

trade dispute that has cast a pall over the global economy.

Senior

Trump administration officials estimate that 50-70% of Iran’s oil exports are

flowing to China, while roughly 30% go to Syria.

China

is typically Iran’s largest oil customer and contests Washington’s sanctions.

But June imports of around 210,000 bpd were the lowest in nearly a decade and

60% below their year-ago level, according to customs data, as some Chinese

refiners, concerned about the sanctions, refrained from dealing with Iran.

The

General Administration of Chinese Customs is scheduled to release details of

July imports by origin in the last week of August.

Neither

the National Development & Reform Commission, the state planner that

oversees the country’s state oil reserves, nor the national customs bureau

responded to Reuters’ requests for comment.

JINZHOU

RESERVES DOUBLED

Similar

to June imports, it’s unclear how much of the July shipments has been sold to

buyers or stored in bonded storage tanks and yet to clear customs. Some 20

million barrels of Iranian oil appeared stranded at the northeastern port of

Dalian after moved into bonded tanks since late last year.

While

the customs department does not disclose details of port entries, oil analytics

firms track where tankers arrive.

According

to research by data provider Refinitiv, July saw five vessels operated by the

National Iranian Tanker Company (NITC) discharge 958,000 tonnes of Iranian crude

into Chinese port Jinzhou in the northeast, Huizhou in the south and Tianjin in

the north.

NITC

didn’t immediately respond to a request for comment.

Jinzhou,

Tianjin and Huizhou are locations for refineries and commercial storage owned

by Chinese state oil firms China Petrochemical Corp (Sinopec Group) and China

National Petroleum Company (CNPC). Some of the country’s tanks holding

Strategic Petroleum Reserves (SPR) – kept by many countries as stockpiles

for emergency situations – are also located in these cities.

Asked

if it was among buyers of Iranian oil, Sinopec declined comment. CNPC did not

respond to a request for comment.

In

a report dated July 29, London-based energy data firm Kpler said inventories at

the Jinzhou underground SPR rose to 6 million barrels from 3.2 million in

mid-June “as a result of Iranian crude flows...The increase is fully the result

of Iranian barrels discharged into the facility.”

The

firm estimated 360,000 bpd of Iranian crude had been delivered to China last

month.

Vortexa,

another London-based energy market intelligence firm, pegged the July

deliveries into China at 4.4 million barrels and identified similar port destinations.


‘DESTABILIZING

ACTIVITIES’

Asked

if US sanctions apply in the case of Beijing storing Iranian oil in SPR

facilities, a State Department official told Reuters Washington does not

preview sanctions activities as it seeks to force Tehran to accept stricter

limits on its nuclear activity and policy in the Gulf.

“But

we will continue to look for ways to impose costs on Iran in an effort to

convince the Iranian regime that its campaign of destabilizing activities will

entail significant costs,” said the spokesman.

In

July, Washington sanctioned state-run Chinese oil trader Zhuhai Zhenrong Co for

allegedly violating restrictions imposed on Iran’s oil sector.

Elizabeth

Rosenberg, an expert on sanctions with Center for a New American Security, a

Washington-based think-tank, said if oil changes hands and even if it is then

put in storage, the buyer would then be violating sanctions.

China

has repeatedly criticized the unilateral US sanctions on Iran and opposed

Washington’s “long-arm” jurisdictions.

“Strictly

speaking, from the perspective of international law, China or other countries

don’t have an obligation to obey unilateral sanctions from the US,” said Zha

Daojiong, Peking University professor of International Political Economy.





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