Iran Asks China To Keep Buying Its Oil After U.S. Sanctions

A senior Iranian oil official asked Chinese state oil buyers this week to continue their oil import levels of Iran’s crude after the U.S. sanctions on Tehran return later this year, Reuters reported on Wednesday, quoting three people familiar with the meetings.

Saeid Khoshrou, director of international affairs at the National Iranian Oil Company (NIOC), met with Chinese oil giant Sinopec and with state-run oil trader Zhuhai Zhenrong on Monday, seeking assurance from the Chinese customers that they would continue buying Iranian oil. Khoshrou had accompanied Iran’s Foreign Minister Javad Zarif on the China trip, before the minister headed to Europe to discuss the Iran nuclear deal and the consequences of the U.S. withdrawal with European Union leaders.

According to Reuters’ sources, the Iranian oil official failed to get a firm commitment from the Chinese buyers. They are still reviewing the possible implications of the sanctions, but they also expressed hope that they would keep Iranian oil import levels. The Chinese buyers will conform to China’s official policy on the matter, a source briefed on the meetings told Reuters.

China imported around 655,000 bpd of Iranian oil on average in the first quarter this year—a volume equal to more than a quarter of Iran’s total crude oil exports.

Combined, the biggest refiner in Asia—Sinopec—and oil trader Zhuhai Zhenrong account for nearly 90 percent of China’s crude oil imports from Iran, while state oil firm CNPC purchases the rest, according to Reuters data.

Related: OPEC: The Oil Glut Is Gone

Last week, a spokesman for the Foreign Ministry in Beijing reassured Tehran that China would continue to import its crude, despite the U.S. withdrawal from the nuclear deal.

During the previous sanctions period, China had less banking issues in trading with Iran than Europe, for example, because Beijing used a local bank to settle the payments, mostly in euros and in Chinese yuan. This time around, China could push for more yuan-settled transactions to advance its petroyuan.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• Skeptic Geologist Warns: Permian’s Best Years Are Behind Us
• Oil Prices Rebound On Crude Inventory Draw
• Expert Analysis: What’s Next For Russian Oil