BEIJING: China slashed its crude oil imports from Iran by half in February from December levels to pressure Tehran in a contract dispute, while increasing its purchases from Iran’s rival Saudi Arabia to a record level to fill the gap.
February was the first month to reflect the full scale of the cuts in China’s imports of Iranian oil after top refiner Sinopec Corp decided in December to chop purchases in an attempt to force Iranians to back off from the tougher terms they had proposed for the 2012 contract.
The February imports at about 290,000 barrels per day are about half of December’s 572,800 b/d, 41 percent less than the January level and down 40 percent from February 2011, data from China General Administration of Customs showed yesterday. The sharp drop in Chinese imports adds to trade pressures on Iran stemming from US and European Union sanctions over its nuclear enrichment programme. The West fears it could lead to nuclear weapons, while Iran says it is intended for power generation.
The United States on Tuesday exempted Japan and 10 EU nations from financial sanctions, because they have significantly cut purchases of Iranian crude. But it left Iran’s top customers China and India exposed to the possibility of such steps.
The 491,000 b/d level recorded for January factored in a small part of the planned cuts because of the delay due to the roughly three-week tanker voyage between Iran and Chinese ports. China boosted imports from Saudi Arabia, the only big oil producer with a significant amount of spare capacity, to a record 1.39m b/d in February, 260,000 b/d higher than January and nearly 40 percent above the year-earlier level.
Saudi oil minister Ali bin Ibrahim Al Nuaimi said the kingdom had met all its customer’s requests for oil and stood ready to raise output to full capacity of 12.5m b/d, if needed. “My only mission is to convey to you that there is no supply shortage in the market,” Nuaimi told reporters on Tuesday. “We are ready and willing to put more oil on the market, but you need a buyer.”
China’s record Saudi imports are also largely in line with comments from industry sources that the world’s top oil exporter had been sending some 200,000 b/d of extra oil to Asia, the bulk of which was destined for China. Riyadh has also quietly raised shipments to the United States to the highest level since mid-2008.
Sinopec reduced Iranian imports for lifting through the first quarter of this year to protest tougher payment terms and higher prices proposed by Tehran, Reuters has reported. Under an annual contract that concluded in late February after nearly three months of talks, China will buy 10 to 15 percent less crude from Iran this year versus 2011, with the cuts mostly already made in the first three months, a Beijing-based Chinese oil executive with direct knowledge of the deal said.
The sharp scale-back in February knocked Iran’s ranking to China’s seventh-biggest supplier from third-biggest last year. China, the world’s second-largest oil consumer, is Iran’s largest trading partner and biggest oil client, buying up to 20 percent of the Islamic Republic’s total crude exports.
China has been scouring the world for crude to make up for the lost Iranian oil. Its extra imports in February from Saudi Arabia, other Middle East countries and Russia more than offset the loss of imports from Iran, the data showed.
Imports from Iraq jumped 135 percent year-on-year to 473,634 b/d and were up 26 percent from the level of imports in January, the data showed. Crude imports from other Gulf countries also rallied, with those from Kuwait up nearly 50 percent on the year to 242,092 b/d and from UAE up 45 percent to 195,707 b/d. reuters