Chinese Oil Imports Set To Bounce Back This Month

Chinese oil imports from Iran are on course to rebound this month from the lows of October and November as China’s state-held companies have already started to use the U.S. waivers to continue importing Iranian oil at reduced volumes, Reuters reported on Friday, quoting industry sources and shipping data.

Together with the sanctions on Iran’s oil industry, the U.S. issued waivers to eight Iranian oil customers—including the biggest buyer China—to continue oil imports from Tehran until at least early May 2019.

According to Reuters, under the waiver, China is allowed to purchase 360,000 bpd of Iranian oil for 180 days after November 5.

China and Asia’s biggest refiner Sinopec resumed buying oil from Iran shortly after the U.S. waivers were granted, sources with knowledge of the operations told Reuters.

State energy giant China National Petroleum Corporation (CNPC)—which has invested billions of U.S. dollars in Iran’s oil industry in recent years—will start loading the full volume of its oil production in Iran, beginning this month, an oil executive with direct knowledge of CNPC’s operations in the Islamic Republic told Reuters.

CNPC will likely load at least 2 million barrels per month starting this month, which would be double its previous loadings from its Iranian production—a means to compensate for the reduced lifting before the sanction waivers, according to the oil executive.

CNPC and Sinopec could use up the 360,000-bpd import allowance under the U.S. waiver.

Even if all the allowed import volume is used, China would still be importing around 45 percent less oil from Iran compared to the average 655,000 bpd it bought between January and September.

In October, before any clarity on U.S. waivers, Chinese oil imports from Iran averaged 247,260 bpd—the lowest monthly level since May 2010, according to Chinese customs data, as carried by Reuters.

By Tsvetana Paraskova for Oilprice.com