Wednesday 28 August 2019 - 08:12

China’s oil imports from Iran rise despite US threats

Story Code : 813099
Tugboats dock the oil tanker “Daniel” carrying crude oil from Iran at the port of Zhoushan in China’s Zhejiang province
Tugboats dock the oil tanker “Daniel” carrying crude oil from Iran at the port of Zhoushan in China’s Zhejiang province
The imports by the world’s largest oil buyer and more importantly the increase in shipments came despite Washington’s threat to punish companies after ending waivers to unilateral sanctions on Iranian oil on May 2.

According to GAC figures cited by Platts, China lifted 926,119 metric tons (213,000 barrels per day) of Iranian oil in July, up 4.7% month on month.

China is Iran’s largest oil importer and fiercely opposed to the US sanctions which have failed to stop shipments from the Middle Eastern energy powerhouse.

Beijing has pushed back against the United States, saying China's cooperation with Iran is legitimate under international law and should be "respected".

The United States is currently engaged in a trade war with China. Last month, Bank of America Merrill Lynch warned that a further escalation could encourage closer cooperation between Iran and China. 

The Chinese government’s top diplomat, State Councilor Wang Yi, on Monday hailed Iran as a "strategic partner" as Iranian Foreign Minister Mohammad Javad Zarif visited Beijing. 

"We are comprehensive strategic partners,” Wang said. "That speaks to the high level of our relationship and our close strategic cooperation.”

In an apparent jab at the United States, Wang said that "unilateralism is rising and power politics is emerging".

"Facing this situation, China as a responsible country agrees to work with Iran and other countries to work together for multilateralism, the basic rules of international politics and uphold the rightful interests of each country," he said. 

Zarif echoed those views, saying Iran and China need to join forces to counter unilateralism and "contempt for international law".

Iran's top diplomat said he was particularly excited by the Belt and Road Initiative, which aims to recreate the old Silk Road with massive infrastructure spending connecting China with the rest of Asia and beyond.

Iran considers the Belt and Road "to be the future of our region and our global interactions”, Zarif added.

Earlier this month, a report said China has “re-engaged” Iran on three key energy projects which the Asian giant is adamant to carry on with their implementation despite US sanctions.

A senior source working closely with Iran’s Ministry of Petroleum said Phase 11 of the supergiant South Pars gas field, Yadavaran oil field and the Jask oil export terminal are the three projects which the Chinese want to continue.

Beijing has also braced for any fallout from its participation in Iranian development projects and possible face-off with the US, the international energy website OilPrice.com said. 

“If there is any further pushback from the US on any of these Chinese projects in Iran, then Beijing will invoke in full force the ‘nuclear option’ of selling all or a significant part of its $1.4 trillion holding of US Treasury bills, with a major chunk of the paper due to be sold in September on this basis,” it said.

Last month, the US government imposed sanctions on China's energy company Zhuhai Zhenrong Co Ltd. for continuing to import crude oil Iran, drawing strong condemnation from Beijing. 

"We are opposed to the US bullying behavior of wantonly cracking down, suppressing and sanctioning Chinese companies and individuals based on US domestic law. We are firmly opposed to it and strongly condemn it," Foreign Ministry spokeswoman Hua Chunying said.

Zhuhai Zhenrong is one of China’s largest state-backed oil companies for transporting Iranian crude oil. It has strong links to Iran and accounts for more than 60% of China's trade with the Islamic Republic, according to the company's website.

The company is already under US sanctions for supplying gasoline to Iran in 2012, but it has little overseas exposure, making the punitive measures worthless.