Iran major crude buyers, India, China, diverge as sanctions loom

CHINA AND IN DIA, two major buyers of Iranian crude, appear to be looking in opposite direction with unnamed sources suggesting last week that the Chinese government has directed at least two of its state oil companies, China National Petroleum Corp. and Sinopec to stop buying Iranian oil as the United States prepares to impose sanctions on the country come November 4.

According to the unnamed sources, the ban is temporary and purchases may resume depending on the outcome of negotiations with the U.S. This is because companies that continue buying Iranian crude face the risk of being cut off from the American financial system, after sanctions take effect.

India on the other hand, has said that it plans to continue taking limited volumes from the Persian Gulf state in November. Reuters reported that refiners at New Delhi had placed November nominations to lift nine million barrels of oil from Iran despite the impending sanctions.

All nations are negotiating with the U.S. for waivers from the restrictions, after President Trump in May withdrew from a nuclear agreement with Tehran hammered out by his predecessor, Barack Obama, and said he would reimpose economic curbs lifted under that 2015 accord.

Reuters had also reported earlier that the Chinese companies made no bookings for November-loading Iranian oil. “The Chinese side welcomes a practical solution that can maintain normal economic and trade cooperation with Iran,” foreign ministry spokeswoman Hua Chunying said at a briefing on Wednesday.

The decision precedes an upcoming meeting between Chinese President Xi Jinping and U.S. counterpart Donald Trump at the Group of 20 summit next month and coincides with flaring trade tensions between the countries. For Iran, no purchases by CNPC and Sinopec means it will lose out on sales to its top oil customer after a halt by other major buyers like Japan and South Korea.

Beijing-based spokesmen for both CNPC and Sinopec, which is formally known as China Petrochemical Corp. declined to comment.

The world’s second largest economy also halted purchases of U.S. crude in August for the first time since September 2016, according to U.S. Census Bureau data, as the trade spat between the nations escalated.

Also, Brent crude topped $85/per barrel earlier this month for the first time in four years, but prices have since retreated as Saudi Arabia and other producers have said they will make efforts to fill any potential gap in supply.