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China buys more Iranian oil now than it did before sanctions, data shows -Breaking

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© Reuters. FILE PHOTO – A flare from an oil platform can be seen with an Iranian flag on the Gulf of July 25, 2005. REUTERS/Raheb Homavandi

Alex Lawler and Chen Aizhu

SINGAPORE/LONDON, (Reuters) – China’s recent purchases of Iranian oil are at record highs, surpassing a peak in 2017, when it was not under U.S. sanctions. Tanker tracking data revealed that this is because China has increased its purchase of Iranian oil to record levels.

This is despite talks between Tehran, world powers and the United States to revive the 2015 nuclear deal which will remove U.S. sanctions from Iranian oil exports. These talks have been intensified over the past weeks.

Iran’s oil could be returned to the market, decreasing global shortages and lowering crude oil prices which are currently at $100 per barrel after Russia’s invasion.

According to three trackers of tankers, Chinese imports have exceeded 700,000. barrels per daily (bpd), for January. This surpasses the peak of 623,000 BPD recorded in 2017 by Chinese customs before Trump’s re-imposition sanctions on Iranian oil exports.

According to one tracker, imports averaged 780,000 bpd between November and December.

U.S. President Joe Biden said that the administration so far has chosen to not enforce sanctions against Chinese companies and individuals during negotiations for reviving 2015’s deal.

According to traders, record Chinese oil purchases from Iran would result in less oil being available for Tehran’s former buyers such as Indian refiners and European ones if the sanctions are lifted and oil exports to the Islamic Republic allowed to resume.

They also said that Iranian oil would continue to be cheaper than rivals from Brazil or West Africa.

China’s Foreign Ministry declined to provide details when Reuters asked. But, it reiterated its opposition to Washington’s long-arm jurisdiction. It also urged Washington not to remove any unilateral sanctions.

The Iranian oil ministry didn’t respond to our request for comment.

According to a spokesperson for the U.S. State Department, Washington was aware of China’s Iranian oil purchase and had discussed it with Beijing.

“China is an important trading partner for Iran, so, of course, our discussions with China on how best to get a mutual return to compliance with the JCPOA include discussions of sanctions enforcement,” said the spokesperson, referring to the 2015 nuclear deal formally known as the Joint Comprehensive Plan of Action.

DEMAND FROM THE TEAPOTS

China’s “teapots” are the primary buyers. They are being attracted by low prices and tight regulation, traders stated.

A China-based executive in the industry told Reuters that Iranian oil is becoming more popular because it’s cheaper. He was referring to independent refiners.

According to traders, January Iranian cargoes were traded at $5 per barrel less than benchmark. They said that these prices were stable compared to late 2021, but they are more appealing against Brazil’s supply which was priced $7 higher than Brent.

Petro-Logistics, a consultancy that monitors oil flows, reported Iran’s crude oil exports increased to 1,000,000 bpd in December, their highest levels in three years.

“Iran’s oil exports are mostly going to China, often through convoluted routes and transshipments, with small volumes going to Syria each month,” said CEO Daniel Gerber.

Petro-Logistics estimates total Iranian oil exports to be close to 800,000. bpd for January and 700,000. bpd for February. OilX however, an additional data analytics firm, estimated that Iranian oil exports were more than one million barrels per day for February and January.

Chinese customs reported the first Iranian oil import in December. They will release February and January data in March.

Iran will likely to sell off independent Chinese refiners if the 2015 nuclear agreement is renegotiated. However, the Islamic Republic is not expected to cut the water supply to these customers who have provided more than $20 Billion in revenues over the last two years.

Iran might not feel confident about how long the deal will be valid. China’s oil sector executive said that Chinese teapots were an indispensable outlet for Iran during difficult times. Iran wants to preserve this channel.

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