China’s largest refiners, state-held Sinopec and China National Petroleum Corporation (CNPC), haven’t booked any crude oil cargoes from Iran for November due to fears that in doing so, they would be in breach of the U.S. sanctions on Iranian oil returning in less than two weeks, Reuters reported on Wednesday, quoting two people with direct knowledge of the plans.
The key concern for the state-owned refiners is the uncertainty over whether Iran’s Chinese customers would obtain waivers from the sanctions, Reuters’s sources said.
China, Iran’s single-largest oil customer, has said that it would not stop buying Iranian oil despite U.S. efforts to have the Iranian exports down to ‘zero.’ But Beijing was also said to have agreed to refrain from increasing its oil purchases from Iran. Iran, for its part, is keen to keep its single biggest oil customer when U.S. sanctions on Iranian oil exports kick in.
Analysts have assumed that China will keep buying Iranian oil and be pretty much the only certain meaningful customer of Iran, because the other major buyer, India, is even more hard-pressed by the United States to wind down purchases from Tehran.
Last month, China’s top refiner Sinopec was said to be halving its oil imports from Iran as of September, bowing to pressure from the United States.
Sinopec—listed in Hong Kong, but more importantly, also in New York—has reportedly faced direct pressure from the United States to curtail Iranian oil imports. According a Reuters source, U.S. officials visited Sinopec in Beijing in August and demanded steep reductions of oil imports from Iran.
Now a senior industry official with a Chinese state oil firm told Reuters on Wednesday that in the face of uncertainty over waivers, “No company will risk taking any barrels for November.”
“The risk is a lot greater than the amount of oil cut,” the source told Reuters.
The United States has recently hinted that it was at least considering waivers, but U.S. Treasury Secretary Steven Mnuchin said over the weekend that it would be more difficult for Iranian oil customers to get waivers from the sanctions than it was during the Obama administration, and the United States would issue waivers, if any, only to buyers that have significantly reduced Iranian purchases.