China’s Iran oil imports to rebound in December as buyers use US waivers

Sinopec resumed Iran oil imports shortly after Tehran’s biggest crude buyer received its waiver in November. (Reuters)
Updated 07 December 2018
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China’s Iran oil imports to rebound in December as buyers use US waivers

  • China’s waiver on US sanctions allows it to buy 360,000 barrels per day (bpd) of oil for 180 days
  • For November and December, Iranian Heavy crude sold to Asia has been priced at $1.25 a barrel below Saudi’s Arab Medium

Beijing/Singapore: China’s Iranian oil imports are set to rebound in December after two state-owned refiners in the world’s largest oil importer began using the nation’s waiver from US sanctions on Iran, according to industry sources.

Sinopec resumed Iran oil imports shortly after Tehran’s biggest crude buyer received its waiver in November, while China National Petroleum Corp. (CNPC) will restart lifting from its own Iranian production in December.

It was reported in November that China’s waiver on US sanctions allows it to buy 360,000 barrels per day (bpd) of oil for 180 days.

Top Chinese energy group CNPC, which has invested billions of dollars in Iranian oilfields, is ready to load its full share of production from December, said an oil executive with direct knowledge of CNPC’s Iran activities.

The executive estimated CNPC will load at least two million barrels a month from December, doubling previous levels to help compensate for cuts made before sanctions on Iran’s oil exports went into effect on Nov 5.

Before the waivers had been announced, Sinopec, Asia’s largest oil refiner, had planned to stop loading Iran oil in November, but resumed imports within days of getting the exemption, a second source said.

“We continued lifting Iranian oil in November because we received the waiver,” the second source added.

Sinopec and CNPC will likely use up the 360,000 bpd of Iranian oil imports allowed to China under the waiver.

Another source said Iranian oil is “attractively priced” versus rival supplies from the Middle East.

For November and December, Iranian Heavy crude sold to Asia has been priced at $1.25 a barrel below Saudi’s Arab Medium, a discount not seen since 2004. The source also said many Chinese refiners were geared toward processing Iranian crude grades.

At 360,000 bpd, China’s purchases would still be 45 percent less than the average 655,000 bpd imported during the January-September period.

The rise in Iranian oil supply and surging production from the United States, Russia and OPEC countries has pulled down crude oil prices by almost a third since October. Ahead of the sanctions being implemented in early November, China’s crude oil imports from Iran fell to 1.05 million tons (247,260 bpd) in October, the lowest since May 2010, Chinese customs data shows. Data from the provider Refinitiv Eikon, however, shows that 2.77 million tons of Iranian crude were discharged into Chinese ports in October, including into bonded storage tanks in Dalian.

By December, China’s Iran oil imports could reach almost 3 million tons, the Eikon data showed. A total 2.51 million tons of Iranian crude were discharged into Dalian in October and November, according to the data. Other major Iranian oil buyers, including India, South Korea and Japan, are also increasing or resuming orders.

It is still not clear whether Iran will be able to export much oil after the US sanctions waivers expire around the start of May.


EU debates how and when to start trade talks with Trump

Updated 32 min 9 sec ago
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EU debates how and when to start trade talks with Trump

  • The US and Europe ended a stand-off of several months last July
  • The EU is looking now to start negotiations on tariff reductions, possibly including cars

BUCHAREST: European ministers will begin debating on Friday how and when to start trade negotiations with the United States, aware that US President Donald Trump may impose punitive tariffs on EU car imports if the bloc waits too long.
The European Commission has asked the EU’s 28 countries to approve two negotiating mandates so that formal talks can begin. Germany is keen to start as soon as possible, while France is reluctant to engage with Trump.
The United States and Europe ended a stand-off of several months last July, when Trump agreed to hold off on car tariffs while the two sides looked to improve trade ties.
They committed to work toward removing tariffs on “non-auto industrial goods,” discuss ways to agree on product standards to boost trade and increase EU imports of US soybeans and liquefied natural gas.
The EU is looking now to start negotiations on tariff reductions, possibly including cars, as well as a separate set of talks on making it easier for companies to clear their products for sale on both sides of the Atlantic.
The ministers in Romania will face three questions.
The first concerns timing. Germany, whose exports of cars and car parts to the United States are worth more than half of the EU total, is keen to press ahead, but France is hesitant of moving before European Parliament elections in May.
The second question is whether to include fisheries, which is technically an industrial good. Some countries, such as France again, are concerned about increased competition in the sector, which is already strained by Brexit.
The third question is what to do about the previous broader “TTIP” negotiations, which drew thousands to streets in Europe in protest. The Commission has insisted the slimmed-down trade deal it is proposing is not a TTIP relaunch. One option to make that clear could be to formally end TTIP.
Industrial good tariffs are already low, at around 4 percent.
However, the Commission has said that removing them would boost EU exports to the United States by 8 percent and US exports to the European Union by 9 percent by 2033, corresponding to extra exports of respectively €27 billion and €26 billion ($29.5 billion).