China’s imports of Iranian crude oil have stayed above 500,000 bpd on average for the past three months after dipping in June and July due to limited quotas, trading and shipping sources said. The sources said buyers judged that purchasing cheap crude from Iran outweighed any risks from violating US sanctions. At the same time, Washington has not enforced sanctions on Chinese entities from dealing with Iran amid talks to revive a 2015 nuclear deal. The increase also came after Beijing issued a new batch of oil import quota allocations for independent refiners.
Ship-tracking data indicates around 660,000 bpd of Iranian crude oil arrived in China in August, 545,000 bpd in September, and 470,000 bpd in October. That put the average for the three months at 560,000 bpd, compared to the average of 478,000 bpd over June-July. China’s imports of Iranian crude hit a peak of 730,000 bpd in May and averaged 562,000 bpd for the first ten months of the year.
Chinese refiners do not officially import Iranian oil as they are sidelined by the US sanctions. Instead, Iranian crude was shipped to China disguised as oil from the UAE, Oman, and Malaysia. Iranian crude is traded at a steep discount of around $4-$5 per barrel against Brent crude on a delivered basis, or about $6-$7 below the Oman benchmark prices, traders said. They added that Iran’s cheap crude now accounted for about 6% of China’s total imports, competing with supplies from Brazil and West Africa.
