China state refiners considering resuming Iran oil imports, sources say
The purchases would be the first since 2019, when Sinopec and PetroChina bought Iranian crude shortly after U.S. President Donald Trump reimposed sanctions on Tehran’s oil exports during his first term.
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Three sources at Chinese state oil companies, who spoke on condition of anonymity because the issue is sensitive, said PetroChina and Sinopec are reviewing the banking, insurance and transportation issues needed to restart Iran operations.
The decision follows a US waiver on Monday to allow global customers to buy Iranian oil and petrochemical products and settle them in US dollars, following the signing of last week’s memorandum of understanding that ended the US-Israeli war with Iran.
One of the three sources said, “Let’s see who will be the first to eat the crab,” using a Chinese expression, referring to the person who is the first to tackle something new. He said and pointed out that there is no oil shortage as exports from Saudi Arabia, Kuwait and Iraq increase.
The source added that it is also unclear which banks can provide financing and clearing for the deals and whether Iran has the shipping capacity to deliver the cargo. Sinopec and PetroChina did not immediately respond to emails seeking comment.
Asian refiners, including China, remain well stocked despite supply disruptions from the Middle East due to war, securing cargoes from West Africa, Brazil and Russia. Middle East shipments from Gulf suppliers are expected to recover with the reopening of the Strait of Hormuz under the interim peace agreement.
ACCELERATED LOADS
Iranian oil loadings rose from 340,000 barrels per day in the first 18 days of June and 370,000 barrels per day in May to nearly 1.6 million barrels per day between June 19 and June 24, according to tanker tracker Vortexa.
State firms are also unlikely to continue buying oil from Iran due to weak domestic demand, a second state oil official said, as declines in China’s fuel and petrochemical consumption outpace recent cuts in the country’s crude imports and refinery output.
For now, Chinese independent refiners, known as teapots, remain Iran’s most important buyers of crude oil; He does business with a group of unknown intermediaries and makes his purchases mostly in Chinese yuan.
Among state-owned majors, Sinopec may emerge as a more ready buyer as the refiner, once Tehran’s biggest customer, faces deeper crude supply disruptions and needs to replenish its stocks after being forced to draw on commercial stockpiles since May, two of the three Chinese sources said.
Sinopec consulted National Americans Oil Co about possible purchases under a 30-day exemption in March but decided against it because the window was too narrow to complete a transaction, an industry official close to the Iranian company said.
NIOC, which operates a marketing team each in Beijing and Shanghai, expects renewed interest from state refineries in the coming days, the official said.
NIOC will be the sole contracting party for exempt oil, and Russia’s main export grade ESPO mix will be used as a pricing reference for potential new deal discussions, the official added.
NIOC did not immediately respond to an email seeking comment.
