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CNPC and Sinopec have ordered the shipment of Iranian oil cargoes this month after the lifting of the sanctions, Washington has granted China and seven other Iranian oil importers, the report said. Reuters agency, citing unidentified sources.
The news comes despite Beijing statements that Beijing would not comply with US sanctions against Iran and would continue to trade with the country, including buying crude oil. China is the largest buyer of Iranian crude, with a rate of 475,000 barrels per day in the first quarter of 2019. This exceeds the quota that the United States has allocated to China under the waiver.
Reuters sources, however, said refiners fear penalties for violating the sanctions, as they are both sufficiently exposed to the US banking system to be vulnerable to such sanctions. Despite this, one of the sources said that Sinopec was not willing to break its long-term supply contract with Tehran. This probably means that society will look for ways to get around the sanctions.
At the same time, all Iranian oil customers are looking for alternatives they find, but at a higher price: Saudi Arabia, Iraq and the United Arab Emirates have quickly promised to insure the market that they would intervene and boost exports to fill the Iranian oil gap after the United States announced that no waiver would be renewed. Shortly after, Saudi Arabia announced that it would increase prices for Asian customers for shipments delivered in June in response to requests for additional deliveries. Higher prices would not please China or India, but their options are limited.
Despite Washington's determination to completely stop the flow of Iranian oil to foreign markets, few believe that the goal of zero exports is achievable, even though the sanctions have caused considerable damage to Iran's coffers. The US special envoy for Iran Brian Hook, last month, estimated at 10 billion dollars the losses suffered by Tehran in the oil revenues.
By Irina Slav for Oilprice.com
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