U.S. Steps Up Efforts To Sanction Iranian Crude

The world’s largest crude importer and main customer of Iranian oil, China, is seeking increasingly closer ties with Iran while the United States steps up pressure on the Islamic Republic’s oil exports.   

Chinese President Xi Jinping pledged to continue to develop “friendly cooperation” with Iran during a visit of Iranian President Ebrahim Raisi to Beijing this week.    

“Xi stressed that China supports Iran in safeguarding its sovereignty, independence, territorial integrity and national dignity, supports Iran in resisting unilateralism and bullying, and opposes external forces interfering in Iran’s internal affairs and undermining Iran’s security and stability,” according to a readout of the talks reported by Chinese news agency Xinhua.

The visit of Raisi to China – the first of an Iranian president in many years – comes less than a week after the U.S. stepped up efforts to pressure Iran’s revenues by sanctioning nine companies for producing, selling, and shipping Iranian petroleum and petrochemicals in Asia. 

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned six Iran-based petrochemical manufacturers or their subsidiaries and three firms in Malaysia and Singapore involved in facilitating the sale and shipment of petroleum and petrochemicals. 

“The Biden Administration will not hesitate to take action against sanctions evaders, and we are determined to step up our enforcement in light of Iran’s continued, alarming nuclear advances,” Robert Malley, the U.S. Administration’s special envoy for Iran, said, commenting on the latest round of sanctions. 

“China is the main destination of illicit exports by Iran,” Malley told Bloomberg Television last month, adding that discussions with China would be “intensified” to dissuade it from buying Iranian oil. 

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It’s no secret that the bulk of Iran’s oil exports are going to China via a dark fleet of tankers or the falsification of documents to pass off the crude as originating from countries other than Iran, most recently from Malaysia.

In recent weeks, signs have emerged that Iran has boosted its oil exports, especially to China. At the end of 2022, Iranian exports are estimated by vessel-tracking companies to have exceeded 1 million barrels per day (bpd) and are even believed to have hit 1.3 million bpd in November, the highest levels since 2019. 

China imported record volumes of Iranian crude in December 2022, while Iran’s crude and condensate exports reached a record high under sanctions in the last month of 2022, Armen Azizian, Crude Market Analyst at Vortexa, said in a report in January. 

With Russia aggressively pushing to sell its crude in China after the Russian invasion of Ukraine and the Western embargoes on Russia’s oil, tankers switched from shipping Iranian oil to trade with Russian crude. However, the fourth quarter of 2022 saw net fleet additions to the Iranian trade in oil, Azizian said. 

So, during the meeting with the Iranian president in Beijing on Tuesday, Xi said that “China will unswervingly develop friendly cooperation with Iran, push for new development of the China-Iran comprehensive strategic partnership, and play a positive role in world peace and human progress.” 

China and Iran will aim to “deepen practical cooperation on trade, agriculture, industry and infrastructure,” Xi said. 

The Iranian president’s visit to China comes just two months after Xi visited Iran’s regional rival, Saudi Arabia

In early December, the Chinese president met with Saudi King Salman and Crown Prince Mohammed bin Salman in Riyadh and vowed to expand oil trading between the nations. 

“China will increase communication and coordination with Saudi Arabia on energy policy, expand the scale of crude oil trade, enhance cooperation on exploration and development, and deliver on the Sino-Saudi Gulei Ethylene Complex Project and other large-scale energy cooperation projects,” Xi said while in Saudi Arabia. 

“The two sides commended their oil trade volume and the great foundations of the cooperation due to the Kingdom’s ample oil resources and China’s broad markets,” a joint statement at the end of the Saudi-Chinese summit in December read.

Source: https://oilprice.com/