U.S. still pressing China to stop importing Iranian crude

More than five months after the US ended sanctions waivers for Iran’s biggest oil buyers, the Trump administration continues to press China to stop importing Iranian crude oil, Brian Hook, the US State Department’s special representative for Iran, said Wednesday.

“We hope that China decides that it will no longer import Iranian crude oil,” Hook said during a Senate Foreign Relations Committee hearing. “It’s not an exotic grade, we have a well-supplied oil market and there has been no interruption of China’s energy needs during this period. so there is no need for them to import Iranian crude oil.”

Iranian oil exports, which averaged more than 1.7 million b/d in March, fell below 500,000 b/d in August and September, based on preliminary estimates compiled from cFlow, S&P Global Platts trade flow software, and shipping sources. Around 200,000 b/d to 250,000 b/d of Iranian exports in September flowed to China, according to preliminary tracking.

Last month, the US Treasury Department sanctioned six Chinese entities and their top executives, including two affiliates of Cosco Shipping, for trading oil with Iran in violation of US sanctions. The US had previously sanctioned China’s state-owned trading company Zhuhai Zhenrong and its top executive for oil trade with Iran.

In the past few months, a large share of Iranian oil flowing to China has been going via the UAE and Malaysia, both of which are popular hubs for ship-to-ship transfers, according to Platts cFlow data and shipping sources.

In recent months, Iran has resorted to storing oil in VLCC tankers in UAE and Malaysian waters. Some of these tankers are used to offload crude oil into other tankers in the region, according to sources.

China has also recently been offloading Iranian oil from bonded storage in Dalian in northern China, according to sources.

Late last year, state-owned National Iranian Oil Company sent more than 20 million barrels to Dalian, where it had leased storage tanks to enable China access to Iranian oil post sanctions, according to Platts cFlow.

Representatives at Iran’s oil ministry were unavailable for comment.

US SANCTIONS
At Wednesday’s hearing, Hook gave staunch support to US economic and diplomatic isolation of Iran and said there were no plans to ease oil sanctions in order to start negotiations with Iran.

“There is no precedent in Iran’s history for the amount of pressure we have put on them,” Hook told the committee, pointing towards estimates that the sanctions will cost Iran $50 billion annually in oil revenues.

Iran’s proxies, Hook said, “are weaker because of our sanctions.”

Hook said that the US was willing to meet with Iran “without preconditions,” but said the US was unwilling to ease sanctions on Iranian crude exports in order to get the Iranians to negotiate.

“That oil goes to fund terrorism,” Hook said. “So we don’t want Iran to sell its oil.”

At the hearing, Senator Rand Paul, a Kentucky Republican, criticized the administration for not offering to ease sanctions, such as allowing Iran to continue to export oil to its Asian buyers, in order to compel Iran into negotiations.

“You have to be willing to offer something,” Paul said.

Paul said that such a concession could not be made now following Iran’s attacks on oil shipments and facilities, including the September 14 attack on the Abqaiq oil processing facility.

Hook said those were “panicked attacks” by Iran, which had little impact on world oil markets.

“Iran is trying to create shocks in the global energy market and they have failed in that to date,” Hook said.

Source » platts

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