$1 Billion In Iranian Crude Is Stranded At A Chinese Port

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Originally appeared at ZeroHedge

It’s no secret that Beijing has chafed at American audacity to try and dictate whom Chinese refineries can and can’t buy oil from. And in the latest example of just how aggravating the decision to end waivers for Iranian crude imports has been for the world’s second-largest economy, Reuters reported that some 20 million barrels of Iranian crude have been languishing at the northeastern port of Dalian for months, but because of the US’s decision to re-impose sanctions on Iran back in November, nobody wants to touch the oil.

$1 Billion In Iranian Crude Is Stranded At A Chinese Port

Even when the waivers were in effect, Chinese refineries couldn’t secure financing and insurance that would allow them to purchase the oil because of the uncertainty surrounding the future of the waivers.

Iran sent the oil to China via the National Iranian Tanker Company before the sanctions were imposed as Iran struggled with a backlog of oil that had exhausted the country’s domestic storage capacity. So Beijing, the largest buyer of Iranian oil, allowed the NTCC to store some oil in so-called bonded storage tanks situated in the Dalian port. The oil has yet to go through Chinese customs.

$1 Billion In Iranian Crude Is Stranded At A Chinese Port

China filed a formal complaint with the US over its decision to end the waivers, but the US has refused to consider any exceptions to its plans to reimpose full sanctions.

As one analyst told Reuters, no Chinese company will touch the oil unless specifically instructed to do so by the Chinese government.

The oil is being held in so-called bonded storage tanks at the port, which means it has yet to clear Chinese customs. Despite a six-month waiver to the start of May that allowed China to continue some Iranian imports, shipping data shows little of this oil has been moved.

Traders and refinery sources pointed to uncertainty over the terms of the waiver and said independent refiners had been unable to secure payment or insurance channels, while state refiners struggled to find vessels.

The future of the crude, worth well over $1 billion at current prices, has become even more unclear after Washington last week increased its pressure on Iran, saying it would end all sanction exemptions at the start of May.

“No responsible Chinese company with any international exposure will have anything to do with Iran oil unless they are specifically told by the Chinese government to do so,” said Tilak Doshi of oil and gas consultancy Muse, Stancil & Co in Singapore.

To be sure, Reuters says, some of the oil was apparently purchased by a Sinopec refinery. But the bulk of the stock remains untouched.

Some Iranian oil sent to Dalian has moved, according to a ship tracking analyst at Refinitiv.

Dan, a supertanker owned by NITC moved 2 million barrels of oil from Dalian more than 1,000 km (620 miles) to the south to the Ningbo Shi Hua crude oil terminal in March, according to Refinitiv data.

Ningbo is home to Sinopec’s Zhenhai refinery, one of the country’s largest oil plants with a capacity of 500,000 barrels a day and a top processor of Iranian oil.

The headache for Beijing will likely only get worse, because shipping data show more Iranian crude is heading for Chinese ports.

For now, more Iranian oil is heading to China, with the supertankers Stream and Dream II due to arrive in eastern China from Iran on May 5 and May 7, respectively, Refinitiv data showed.

Some of this crude may be from Chinese investments into Iranian oilfields, a sanctions grey area.

Eventually, this could create incentives for non-compliance that are just too powerful for Chinese companies to ignore, particularly companies that have investments in Iranian oilfields. Some companies might try bartering for the oil, while others resort to illegally forged documents.

Whether China will keep buying oil from Iran remains unclear, but analysts at Fitch Solutions said in a note “there may be scope for imports via barter or non-compliance from … China.”

Muse, Stancil & Co’s Doshi said the only way to get the Iranian oil out of Dalian now was by cheating.

“Only rogue parties might try to cheat the system and try to pass the Iranian oil at Dalian as something else via fraudulent docs. But I doubt this is easy or can amount to much in terms of volume.”

Regardless of what happens to the oil, the incident serves as a reminder of the many annoyances that US sanctions create for its geopolitical rivals. Every barrel of China has sitting offshore that its refineries can’t touch is one more reason for Beijing to pursue the creation of an alternative payments channel that’s outside of American control…and more incentive for Chinese refineries, at the government’s behest, to push exporters to accept payment in yuan, something that the Shanghai-traded, yuan-denominated oil futures have already incentivized.

The US should acknowledge the perverse incentives for de-dollarization that its own policies have created – something that one of America’s favorite boogeyman has labeled a “colossal strategic mistake.”

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  • Simon Abruzzo

    China is playing like bitches, learn a thing or two from the Putin and how it’s really done.

    • John Hanson

      Lol, they seem to be playing it the same, they love that USD.

    • Sinbad2

      You misconstrue China’s soft spoken and diplomatic speech for weakness.

      The Americans made a big trade attack, stopped Chinese companies buying American integrated circuits. So now China makes its own that are better than the chips Apple uses, and American chip sales are in a permanent decline.
      America applied tariffs, which has hurt the US economy, while China continues to grow.
      China takes American dollars and builds factories and buys gold with them.

      Believing the BS you get in the western media that China is folding on trade is a fools errand.
      Russia does not have the financial clout to fight the US economically, so it uses its military.
      China is doing a deal with India, where they the largest importers of oil, will set the price, and not the OPEC cartel the US created.
      China has consumed more steel and concrete in the last 3 years, than the US consumed in the whole of the 20th century.

      America is a dead man walking, everything is going exactly to China’s plan.

    • Toronto Tonto

      putin is an idiot

      • Sinbad2

        Losers always find comfort in banal insults.

  • 1691

    Reuters? Really? LOL!

    • Jens Holm

      I dont think You know what Reuters are.

      • 1691

        I know you can not think.

        • FlorianGeyer

          Jens thinks in Riddles that even he cannot understand :)

          • Valerianus Maximus

            Jens is a Danish alcohol spokesman gone rogue.

          • Jens Holm

            I cant effort the alcohol part :)

        • Jens Holm

          Reuters are the most reliable source as well as one of the biggest.

          They have at least 2 kinds of stuff 1) Telegrams comming in from the whole world and 2) Homeproduced – and Yes the homepriduced can be mistakes or biased.

          Compared to others, oits the best You can get.

      • Sinbad2

        I do, they are the US Government in drag.

        • Jens Holm

          Reuters are BRITTISH.
          .

          • Sinbad2

            Wow man have you been in a cave?
            Reuters was bought by the Canadian company the Thomson Corporation over a decade ago.

          • Jens Holm

            Our world is not like that. You also tell those companies are runned by countries, which they are not.

            You even can be owner or partowners in most of them being an investor and by that stockholder.

            If things were and are as bad as You say, we sould have collapsed many years ago and fx have low GDP as many others in the world.

            Looking at the disagreements here at these sites show very well, that lie many times more among each other many times worse then information comming in and out of Reuter as well as the journalisme, they make themselves.

            Compare what Turks, Assads, FSA, SDFs, ISIS, Russia and refugees think about Idlib and solutions there.

            How can You say those has any kind of respect for truth as well as the many commenters there.

            I as several others can take many fakes out everyday even among those, which the site brings, but are the rest then the truth. I have my doubt for many of them as well. So many are created and by people knowing less then me, and the different only is, that I might make big miustakes, but I try and are not being paid to do so.

          • Sinbad2

            You brought up that they were BRiTISH, like that made them a reliable source not me.

            Also accusing me of not fact checking, when it’s you that is short on facts.

            Then you waffle on in an attempt to coverup your errors, which is a sign of a disreputable character.

            Be a man, just admit you were wrong, and learn from it.

  • John Hanson

    I find it absolutely insane that every supposed sovereign Nation is absolutely dependent on using USD for trade and commerce.

    I find it equally insane that these other Nations can’t form their own way of resolving international commerce that doesn’t involve the US, the Jewish financial overlords, or the numpty Eurotrash.

    Something is real fishy that these other supposed sovereign Nations can’t get their collective acts together.

    • Sinbad2

      Gaddafi tried, so did Saddam Hussein?

      • David Bedford

        Gadhafi should have coordinated his de-dollarisation with Russia and China and all done it together but the American dollar will become less palatable for its allies it’s only a matter of time.

  • Rhodium 10

    Chiina buy Iran oil and pay them in Yuan currency in Chinese Bank Accounts!..thats all!…refinerys and oil companys belong China goverment and they will do the same like in Russia when Putin gave an order to pay in ruble instead of dollars Russian oil extracted for the far east to Russian companys…Reuters have the same credit that Amaq agency…

    • Sinbad2

      “refinerys and oil companys belong China goverment”

      Rubbish there are many privately owned refineries in China, that’s why they aren’t buying the Iranian oil, they fear US sanctions.
      Also Russia still accepts US dollars, because the contracts it signed with buyers stipulated US dollars. Russia uses any extra US dollars it has to buy gold.

  • TiredOfBsToo

    Among the many talents of the US regime, aside from destroying sovereign states through various means, is the ability to shoot itself in the foot, for which we can now observe actions by the regime which accelerate the world to dump the dollar for both trade and use as the reserve currency. At the current rate of acceleration, the world will soon gain it’s freedom from the yoke of financial tyranny.

    • Sinbad2

      Exactly, up until King Trump banned the sale of IC’s to certain Chinese companies, the US was the major supplier of IC’s.
      Now China is taking the lead, and American sales have plummeted.

  • Rafik Chauhan

    China has capacity and money to Bring US dollar to it knees . but As usal China cannot be afriend of anybody without they get something in return. Chinese are backstabber they will look for their benfit even if their friends is destroyed by some criminal. Iran has to be careful of this Chinese.

    • Sinbad2

      Yes they have learned the ways of the American.

  • Brian Michael Bo Pedersen

    So you cold buy the Oil for a cheap price, since no one want to touch it, then it would magically disappear and you can sell for big bucks?

    • Sinbad2

      That’s exactly what China and India are planning.
      Whilst the west pays 70 bucks a barrel, they will pay $40, which will mean they can make and sell stuff for a lot less than the west.

      It’s a perfect storm that the US has created, that will destroy it.

  • jm74

    Any report from Reuters need to be treated suspiciously; even better don’t post the BS.

    • Sinbad2

      I always read Reuters, it’s good to know what your enemy is up to.
      As an example Reuters ran a story a few days ago about “illegal” gold exports from Africa, and today tucked away in a story about US sanctions on Venezuela information that Venezuela exported nearly a billion dollars of gold last year.

      So who is buying all this gold?
      People are swapping paper money, for real money, gold.
      A currency crash is coming.

  • verner

    not to worry – it will find a home in china once things have settled down a bit. trust china won’t bow to the criminally insane and corrupt junta in washington dc. business as usual telling them crooks and criminals that the days are gone when the criminally insane and corrupt junta of neo-nazi morons of moronistan (aka usa – home of those morons) could dictate to the world what to do and what not to do. that would be a larf.

    and no bounty on fatso’s head yet, or bolton’s. pity!

  • Xoli Xoli

    Sell it to Africa countries and North Korea Syria.

  • Xoli Xoli

    Chinese Terrorize 8n South China sea by USA but are following USA orders instead of dumping USA dollars their love to trade in that evil world control currency.