According to Vortexa Analytics, China has transferred nearly four million barrels of Iranian crude oil into its state reserve tanks in Zhanjiang’s southern port city. This was done over the past few days.
This comes at a time when world powers are engaged in hard negotiations with Iran to revive a 2015 nuclear deal. It will also include lifting U.S. sanctions against Iranian oil. The deal was reimposed by the sanctions after the Trump administration pulled out.
Iran is home to the fourth-largest global oil reserves. However, sanctions have stopped Iran from pumping oil at any near capacity since 2018.
In rare coordination with the United States, China will also replenish its strategic petroleum reserves. This is to cool down global oil prices, which reached a seven-year high last week.
China has been importing Iranian oil under the radar, which isn’t reflected in the official customs data. This is because buyers are afraid of violating U.S. sanctions. China’s customs reported on Thursday that it had imported Iranian crude oil for the first time in a year, despite continuing sanctions.
According to the General Administration of Chinese Customs data, China imported 260,312 tonnes (1.9 Million barrels) of Iranian crude oils in December. This is double the volume of Iranian oil that was last recorded in December 2020.
According to Reuters, a senior trade source who knew the cargo told Reuters that it was taken into a Zhanjiang state reserve site in December.
According to Vortexa Analytics, another shipment of similar size was then sent out and was also discharged into the same port as the emergency stockpile.
“There were earlier reports that Iran was importing crude oil – but the silence wasn’t too loud. Tilak Doshi (managing director at Doshi Consulting in Singapore), believes that the Chinese are now testing openly to see U.S. responses.
China’s National Food and Strategic Reserves Administration didn’t immediately respond to our request for comment. The U.S. State Department was not immediately available for comment.
“This (China’s attempt) to cool oil prices. “It’s basically to show that there’s more supply even if it’s only available for them,” explained a senior oil trader, who declined to be identified because he isn’t authorized to speak to media.
Officially, China continues to import Iranian oil from Iran this year, despite sanctions that Washington could enforce to remove those who violate them.
Reuters reported that between August and October, shipments averaged more than 500,000 barrels per hour. This was because buyers considered the benefits of getting crude oil at low prices to be worth the risk of violating U.S. sanctions.
Traders have stated that Iran crude oil has been exported to China in order to avoid sanctions. It was marked as oil from Oman, United Arab Emirates, and Malaysia.
According to estimates by traders and shipping data, Iran has accounted for approximately 6% of China’s crude oil imports.
Reuters reported last week that China was likely to release some stock from its strategic stockpile in the Lunar New Year.
