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With the agressive trade tactics of the U.S. it is no surprise that China is ignoring the US demand that it stops importing oil. China is Iran's biggest impoter and it has developed a friendly relationship with Iran it says.

Iran Oil Importers

If you wanted ti fire another shot at China this would be one. The move comes after the U.S. withdrew last month from the 2015 Iran nuclear deal. America has pressed countries to cut oil imports from the Middle Eastern country to "zero" by Nov. 4 or face sanctions.

Measures taking effect in November will ban purchases of Iranian oil and transactions with the Central Bank of Iran, which handles oil payments. Financial institutions that violate the sanctions will lose access to dollar-based payment systems.

 "China and Iran are friendly countries to each other. We maintain normal exchanges and cooperation on the basis of conforming to our obligations under the international law, including in the fields of economy, trade and energy. This is beyond reproach." the Foreign Ministry's Lu Kang told reporters Wednesday.

The Nikkei reports that Iranian President Hassan Rouhani attended this month's Shanghai Cooperation Organization summit in China's Shandong Province as an observer at Beijing's invitation. He met there with Chinese President Xi Jinping, who pledged to expand economic cooperation between the two countries. China is among the parties to the nuclear deal.

With regards to the US dollar China in March launched yuan-denominated oil futures to promote the currency's use in a market dominated by the USD. Iran reportedly also accepted yuan payments from China for oil under similar sanctions in 2012.

Cut off from other export markets, Iran may sell crude for cheap to China, further exacerbating tensions between Washington and Beijing. Japan also cannot comply too readily to the U.S. demands, as it has maintained diplomatic relations with Iran to secure a stable oil supply.

It is true that Japan buys less of its oil from the Iran than before, now around 5.5% of its oil imports come from Iran.

."We plan to hold discussions with relevant countries, including the U.S., to ensure that Japanese companies are not adversely affected," Chief Cabinet Secretary Yoshihide Suga told reporters Wednesday.

The European Union will press the U.S. to exempt European companies from the sanctions, an EU source familiar with the situation said. Brussels is also preparing to revive a so-called blocking statute that bars EU businesses from complying with sanctions imposed abroad by a third party. The EU seeks to maintain the nuclear agreement, to which Britain, France and Germany are signatories. 

Source: Asian Nikkei Review

From The TradersCommunity News Desk

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