China still taking Iran oil, weeks after U.S. sanctions toughen

7/26/2019

SINGAPORE - China’s still importing oil from Iran weeks after the U.S. imposed sanctions aimed at halting sales of crude from the Persian Gulf nation.

Official customs data on Friday showed China imported 855,638 tons in June, the equivalent of about 209,000 bpd. While that’s less than in May and the lowest since mid-2010, the data adds to speculation that Beijing may risk running afoul of American sanctions to secure crude supplies from the Islamic Republic.

All eyes are on China’s oil purchases as Donald Trump’s administration continues to clamp down on companies and individuals flouting its restrictions. The import-reliant Asian nation is one of the few remaining buyers of Iranian barrels, after other countries such as South Korea and Japan halted flows.

The shipments that arrived at Chinese ports in June could nevertheless constitute the “incidental transactions” that U.S. officials had previously said may occur without breaching restrictions. With a three to four-week voyage from Iran to China, it’s possible that some of the oil loaded before May 2 and arrived in China in June.

According to industry consultant FGE, about 450,000 bpd of Iranian oil were in transit as of early May when the U.S.-issued waivers expired. Still, tankers are hauling millions of barrels of oil from the Islamic Republic towards China, although this hoard of crude may be held in what’s known as “bonded storage” without crossing customs.

China imported about 494,000 bpd of Iranian crude in the first five months of this year, compared with more than 660,000 bpd in the same period in 2018. In June, the Asian nation is expected to ramp up purchases from other major oil-producing countries in the Middle East, West Africa and Russia to make up for the loss of supplies from Iran.

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