China calls halt to Iran oil orders

Beijing has criticized the unilateral US sanctions on Iran, but Chinese refiners are erring on the side of caution in the face of the bans. (Reuters)
Updated 10 May 2019

China calls halt to Iran oil orders

  • The US has not renewed any exemptions from sanctions on Iran, taking a tougher line than expected on the expiry of the waivers
  • Sinopec and CNPC have skipped bookings for cargoes loading in May as the companies were worried that taking oil from Iran could invoke US sanctions

SINGAPORE: China Petrochemical Corp. (Sinopec Group) and China National Petroleum Corp. (CNPC), the country’s top state-owned refiners, are skipping Iranian oil purchases for loading in May after Washington ended sanction waivers to turn up pressure on Tehran, three people with knowledge of the matter said.
The US has not renewed any exemptions from sanctions on Iran, taking a tougher line than expected on the expiry of the waivers. The waivers were granted last November to buyers of Iranian oil.
China is Iran’s largest oil customer with imports of 475,000 barrels per day (bpd) in the first quarter of this year, according to Chinese customs data.
Two of the sources said Sinopec and CNPC have skipped bookings for cargoes loading in May as the companies were worried that taking oil from Iran could invoke US sanctions and cut them out of the global financial system.
A third source said Sinopec, which buys the majority of China’s Iranian oil imports, does not wish to breach a long-term supply contract, but has opted to suspend booking new cargoes for now due to the sanction worries.
All those with knowledge of the matter requested anonymity due to the sensitive nature of the topic.
Of the five supertankers that loaded Iranian crude in April for China, two have discharged, while another two are waiting off Ningbo and Zhoushan in eastern China to discharge, according to Refinitiv data and Refinitiv analyst Emma Li. A fifth tanker is heading to Shuidong in southern Guangdong province.
The sources said they did not know how long the suspensions will last.
Both Sinopec and CNPC declined to comment. The National Iranian Oil Company (NIOC) did not immediately respond to an email from Reuters seeking comment.
The two firms took a similar move last October by skipping shipments for November, before Washington reimposed sanctions on Iran’s oil exports to push the Islamic Republic to renegotiate a deal to stop its nuclear and ballistic missile programs and curb its regional influence.
They later resumed bookings after the US granted waivers to China and other seven global clients of Iranian oil, and purchased additional cargoes to make up the delayed shipments, according to the third source and trade flow data.
“There are no nominations so far, but companies are trying to find some solution, such as offering to top up volumes in later months,” said the source.
Sinopec agreed in 2012 to lift an average of about 265,000 bpd oil from Iran in a long-term deal that expires end of 2019.
While Beijing has criticized the unilateral US sanctions on Iran and the end to the exemptions, companies are erring on the side of caution unless they receive a specific government mandate to keep ordering oil from Tehran, the first two sources said.
CNPC, whose Iranian oil comes mostly from its investments at two Iranian oil fields, is also skipping imports for this month, said one of those sources.
“For now it’s just not worth the risks as the volume is very small in (the company’s) overall purchases,” said the source.


OECD forecast sees global growth at decade low

Updated 22 November 2019

OECD forecast sees global growth at decade low

  • Governments failing to get to grips with challenges, outlook says

PARIS: The global economy is growing at the slowest pace since the financial crisis as governments leave it to central banks to revive investment, the OECD said on Thursday in an update of its forecasts.

The world economy is projected to grow by a decade-low 2.9 percent this year and next, the Organization for Economic Cooperation and Development said in its Economic Outlook, trimming its 2020 forecast from an estimate of 3 percent in September.

Offering meagre consolation, the Paris-based policy forum forecast growth would edge up to 3 percent in 2021, but only if a myriad of risks ranging from trade wars to an unexpectedly sharp Chinese slowdown is contained.

A bigger concern, however, is that governments are failing to get to grips with global challenges such as climate change, the digitalization of their economies and the crumbling of the multilateral order that emerged after the fall of Communism.

“It would be a policy mistake to consider these shifts as temporary factors that can be addressed with monetary or fiscal policy: they are structural,” OECD chief economist Laurence Boone wrote in the report.

Without clear policy direction on these issues, “uncertainty will continue to loom high, damaging growth prospects,” she added.

Among the major economies, US growth was forecast at 2.3 percent this year, trimmed from 2.4 percent in September as the fiscal impulse from a 2017 tax cut waned and amid weakness among US trading partners.

With the world’s biggest economy seen growing 2 percent in 2020 and 2021, the OECD said further interest rate cuts would be warranted only if growth turned weaker.

China, which is not an OECD member but is tracked by it, was forecast to grow marginally faster in 2019 than had been expected in September, with growth of 6.2 percent rather than 6.1 percent.

However, the OECD said that China would keep losing momentum, with growth of 5.7 percent expected in 2020 and 5.5 percent in 2021 in the face of trade tensions and a gradual rebalancing of activity away from exports to the domestic economy.

In the euro area, growth was seen at 1.2 percent in 2019 and 1.1 percent in 2020, up both years by 0.1 percentage point on the September forecast. It is seen at 1.2 percent in 2021.

The OECD warned that the relaunch of bond buying at the European Central Bank would have a limited impact if euro area countries did not boost investment.

The outlook for Britain improved marginally from September as the prospect of a no-deal exit from the EU recedes.

British growth was upgraded to 1.2 percent this year from 1 percent previously and was seen at 1 percent in 2020.