China’s Refiners Eye Iranian Oil Post-US Sanctions Waiver
According to sources, China’s state-owned refiners have started to explore the purchase of Iranian crude following Washington’s decision to permit the sale of certain oil already loaded onto tankers, aiming to mitigate price increases stemming from the West Asia War. Representatives of National Iranian Oil Co. and traders acting as intermediaries have been discreetly gauging interest from potential buyers among these and other Asian refiners, according to sources. Iran was previously a significant supplier to major Asian importers, such as South Korea and Japan, prior to the tightening of US restrictions.
China stands as the foremost buyer of Tehran’s crude, offering a crucial financial lifeline. However, the buyers are primarily smaller, private refiners with limited exposure to international markets. Large, state-owned giants opted to remain on the sidelines, cautious of the potential repercussions of US sanctions. The US Treasury’s latest waiver, which pertains to seaborne Iranian oil for a month, mirrors previous measures aimed at facilitating access to Russian oil as the White House works to alleviate a supply crunch and stabilize global prices.
Although the waiver theoretically expands the pool of potential buyers, prospective new entrants in China and beyond indicate they are assessing the intricacies of any acquisition amid ongoing restrictions on Iran, including limitations on its access to the international financial system. Another significant obstacle is the availability of compliant shipping that is both able and willing to transport Iranian barrels. New legitimate shipowners entering the Iranian crude trade are seeking additional information and have voiced apprehensions about potentially exposing themselves to concealed sanctions risks by engaging with intermediaries linked to the illicit trade, as stated by Karnan Thirupathy. “There’s a lot of uncertainty over the trade, and also over what will happen after April 19 if the transaction isn’t completed,” said Thirupathy.
Even seasoned intermediaries in the sanctioned oil trade are scrutinizing the fine print to comprehend what is allowed and to steer clear of future penalties, sources indicated. They stated that without clarity on key details, it is unlikely that the buyers of those seaborne volumes will change. In the meantime, however, the price of Iranian oil sold to China has already risen. According to traders active in the market, Iranian Light was offered at a slight premium to ICE Brent as suppliers assessed the appetite for cargoes.
