Thursday, September 24, 2009

China Firms Selling Fuel to I.R. Iran as U.S. Sanctions Loom

Tweet It!


State-run Chinese companies are selling gasoline to Iran, a move that could undermine U.S. pressure on Iran to give up its nuclear programme, traders and a newspaper report said on Wednesday. Although some sources said the trade had been quietly ongoing for at least a year as Chinese companies joined a handful of global oil traders and Indian refiners who regularly sell to Iran, the revelation of this flow comes at a time when Western powers may consider target Iran's fuel imports if it refuses to enter talks over its disputed nuclear programme. Iran is the world's fifth-largest crude exporter but imports up to 40 percent of its gasoline as it lacks the refining capacity to meet domestic demand.

State-run Chinese firm Zhuhai Zhenrong Corp, the world's largest Iranian crude buyer by company and among the first to heed Tehran's call to pay in euros instead of U.S. dollars, has been shipping a cargo or two each month to Iran for at least a year, two trade sources familiar with the company told Reuters. The Financial Times, citing traders and bankers familiar with Iran's purchasing, reported on Wednesday that China supplies Iran through intermediaries. Oil sources contacted by Reuters said it was also possible that Chinese trading companies were buying spot gasoline cargoes from elsewhere to sell to Iran.

"We estimate, based on what we are hearing in the market, that 30,000-40,000 barrels a day of Chinese petrol is making its way from the Asian spot market to Iran via third parties," the newspaper quoted Lawrence Eagles, head of commodities research at JPMorgan, as saying. The United States has agreed to take part in talks on October 1 between Iran and the so-called "P5+1," which includes the five permanent members of the U.N. Security Council -- Britain, China, France, Russia and the United States -- and Germany. The meeting is seen as a move toward President Barack Obama's pledge during last year's U.S. presidential campaign to try to improve relations with Iran through more direct contacts. The two countries have not had diplomatic ties since 1980. (Read more...)