China, the biggest buyer of Iranian crude, cut imports by 45 percent in February from a month earlier as the nations disagreed over payment terms.
Purchases from the Islamic Republic fell to 1.15 million metric tons, or about 290,000 barrels a day, according to Bloomberg calculations from data by the Beijing-based General Administration of Customs today. That’s the lowest level since May 2010 and compares with an average 557,413 barrels a day last year. China’s total net crude imports rose 7 percent from a month earlier to a record 5.87 million barrels a day.
Purchases from Iran slid as China International United Petroleum & Chemical Co., the Asian nation’s biggest oil trader, delayed signing a 2012 term contract with National Iranian Oil Co. because of the payment dispute. The issues were largely resolved late last month, according to three people with knowledge of the talks. Iran is seeking alternative buyers as the U.S. and European Union impose sanctions on its oil sales in an attempt to halt its nuclear program.
China’s crude imports from Iran “may rebound in the following months but are unlikely to reach average levels purchased last year,” Gong Jinshuang, a Beijing-based senior engineer at China National Petroleum Corp., said by phone today. ``Chinese refiners need to consider the political risk'' surrounding U.S. sanctions on Iran, he said.
China, which typically buys about a fifth of Iran’s crude exports, faces U.S. sanctions if it doesn’t curtail imports. President Barack Obama signed a bill on Dec. 31 that denies access to the U.S. financial system to any foreign bank that conducts business with the Central Bank of Iran.
Excluded From Sanctions
The U.S. won’t impose sanctions on Japan and 10 European Union nations that have “significantly” cut back their purchases of Iranian oil this year, Secretary of State Hillary Clinton said yesterday. China, India and South Korea didn’t get waivers. The EU will ban oil imports from Iran starting July 1.
China opposes trade restrictions against Iran, its third-biggest crude supplier last year, because sanctions aren’t “constructive,” Xinhua News Agency reported Jan. 26, citing the Ministry of Foreign Affairs. The Persian Gulf nation slid to become China’s seventh-biggest supplier last month.
Saudi Arabia, China’s biggest source for imported crude, increased shipments to the country by 14 percent to 5.51 million tons, or 1.4 million barrels a day. Volumes from Angola, the second-biggest, rose 11 percent to 785,000 barrels a day.
China paid an average $112.21 for each barrel of crude it bought from Iran last month, compared with $110.47 in January and $107.28 last year, according to Bloomberg calculations from the customs data.