China’s state refiners explore Iranian oil deals after US waiver: sources
National Iranian Oil and intermediaries quietly sound out Asian refiners for buyers
Add BT as a preferred source
[BEIJING] China’s state-owned refiners have begun exploring purchases of Iranian crude, according to people familiar with the matter, after Washington allowed the sale of some oil already loaded onto tankers in an effort to limit price rises due to the Middle East War.
Representatives of National Iranian Oil and traders who act as intermediaries have also been quietly sounding out potential buyers among these and other Asian refiners, the people said. They asked not to be identified as the conversations are not public.
Iran was once a key supplier to major Asian importers, including South Korea and Japan, before US restrictions tightened. China is the single most important buyer of Teheran’s crude and provides a vital financial lifeline – but the purchasers tend to be smaller, private refiners who have less exposure to international markets. Large, state-owned giants instead stayed away, wary of finding themselves caught up in US sanctions.
The US Treasury’s latest waiver, covering seaborne Iranian oil for a month, follows similar steps to ease access to Russian oil as the White House scrambles to ease a supply crunch and cool global prices.
While the waiver broadens the pool of potential buyers in theory, potential new entrants in China and elsewhere say they are reviewing the mechanics of any purchase at a time when other restrictions on Iran – including limits on its access to the international financial system – remain in place. Another major bottleneck is access to compliant shipping, able and willing to move Iranian barrels.
Legitimate shipowners new to the Iranian crude trade are awaiting further details, and have expressed concern that they may be exposing themselves to hidden sanctions risk by dabbling with intermediaries involved in the dark trade, according to Karnan Thirupathy, partner at Kennedys Law and a sanctions expert.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
“There’s a lot of uncertainty over the trade, and also over what will happen after Apr 19 if the transaction isn’t completed,” said Thirupathy.
Even veteran intermediaries in the sanctioned oil trade are looking over the fine print to understand what is permitted and to avoid future penalties, two of the people said. Without clarity on key details, it is unlikely that the buyers of those seaborne volumes will change, they said.
In the meantime, however, the price of Iranian oil sold to China has already climbed. Iranian Light was offered at a slight premium to ICE Brent as suppliers tested appetite for cargoes, according to traders active in the market.
SEE ALSO
That compares with discounts of more than US$10 a barrel last month. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
