China continued Iran oil imports in July in teeth of US sanctions
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.
ACTIVITIES’
‘DESTABILIZING
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.