China Rejects US Request to Cut Iranian Oil Imports
The US has been unable to persuade China to cut Iranian oil imports, according to two officials familiar with the negotiations, dealing a blow to President Trump’s efforts to isolate the Islamic Republic after his withdrawal from the 2015 nuclear accord.
Beijing has, however, agreed not to ramp up purchases of Iranian crude, according to the officials, who asked not to be identified because discussions with China and other countries continue. That would ease concerns that China would work to undermine US efforts to isolate the Islamic Republic by purchasing excess oil.
Teams of US officials have been visiting capitals around the world to try to choke off sales of Iranian oil by early November, when US sanctions are due to snap back into effect.
While the Trump administration has said it wants to cut Iranian oil exports to zero by the 4th November, most analysts viewed that target as unlikely.
Francis Fannon, the assistant secretary of state for the Bureau of Energy Resources, was recently in China to discuss sanctions, according to a State Department spokesperson.
The Trump administration argued that the nuclear deal, which lifted some economic sanctions in exchange for restrictions on Tehran’s nuclear programme, was fatally flawed because it did not address the country’s destabilising behaviour or limit its development of ballistic missiles, among other things. The other partners in the agreement, including the UK, France, Germany and Russia, criticized the US move to quit the deal.
Unfazed, the administration has warned that even allies would face sanctions if they did not show “significant” progress in reducing Iranian oil purchases by the 4th November, ruling out broad exemptions or waivers.
Reducing Purchases
The oil market has been speculating about how much of Iran’s exports could be eroded by the US sanctions, with analysts from BMI Research to Mizuho Securities predicting that China might boost its imports of cheap supplies from the state and offset cuts by other nations.
Countries including South Korea and Japan are reducing purchases from OPEC’s third-largest producer before the deadline to avoid the risk of buyers losing access to the US financial system.
China — the world’s top crude buyer and Iran’s Number One customer — has said previously that it opposed unilateral sanctions and lifted monthly oil imports from the country by 26 percent in July. It accounted for 35 percent the Iranian exports last month, according to ship-tracking data compiled by Bloomberg.
The Organisation of Petroleum Exporting Countries, led by Saudi Arabia, has pledged to fill any supply gaps in the market after Mr Trump’s complaints. That has helped limit a rally in global benchmark Brent crude, which is trading near US$73 a barrel after falling 6.5 percent last month. The London market is still up about 40 percent from a year earlier.
Source: Rigzone