One month ago, when discussing the shift in Iran's oil customer base as a result of Trump's withdrawal from the 2015 Nuclear treaty and the potential blowback from China, we noted that in a harbinger of what's to come, an executive from China's Dongming Petrochemical Group, an independent refiner from Shandong province, said his refinery had already cancelled U.S. crude orders. "We expect the Chinese government to impose tariffs on (U.S.) crude," the unnamed executive said. "We will switch to either Middle East or West African supplies," he said. We also said that China may even replace most if not all American oil with crude from Iran: "Chinese importers are not going to be intimidated, or swayed by U.S. sanctions."
And sure enough, today Reuters reported that Chinese buyers of Iranian oil are starting to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all of their imports to keep supply flowing amid the re-imposition of economic sanctions by the United States.
To safeguard their supplies, state oil trader Zhuhai Zhenrong Corp and Sinopec Group, Asia’s biggest refiner, have activated a clause in its long-term supply agreements with National Iranian Oil Corp (NIOC) that allows them to use NITC-operated tankers, according to four sources with direct knowledge of the matter.
The expected shift demonstrates that China - Iran’s biggest oil customer with India and the EU in 2nd and 3rd spot - will keep buying Iranian crude despite the US sanctions .
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