BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil

China may be biggest hurdle to US maximum pressure campaign on Iran: analysts

Oil | Crude Oil | Oil Risk | Shipping | Tankers

IEA chief talks oil tanker attacks, slowing oil demand and US crude exports

Natural Gas | Oil | Refined Products | Shipping | Marine Fuels | Tankers

Bunker and Residual Fuel Conference, 16th Annual

Oil | Crude Oil | Refined Products

La refinería de Curazao, cerca de quebrar por la falta de crudo de PDVSA

China may be biggest hurdle to US maximum pressure campaign on Iran: analysts

Highlights

Iran's biggest oil customer may be "too big to sanction"

China may reduce, but not dramatically cut imports

Sanctions compliance could be "bargaining chip" in trade talks

Washington — During a roughly 20-minute call with reporters Friday, Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin mentioned the Trump administration's "maximum pressure" campaign on Iran six times. China was not mentioned once.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

This is telling, analysts believe, as the administration wants to push Iranian crude oil exports to zero, but has no clear plan for how to prevent China, Iran's top oil trading partner, from importing even more Iranian crude when sanctions snap back into place Monday.

Capitol Crude podcast: US sanctions on Iranian crude exports set to snap back

"It's hard to imagine that the Chinese will be willing to accept sanctions," Amos Hochstein, a former special envoy for international energy affairs in the Obama administration, said in an interview with the Platts Capitol Crude podcast. "Iran will continue to export to China."

Hochstein, now a senior vice president with Tellurian, called China "too big to fail" on sanctions, with global buying power and a state-backed financial institution, the Bank of Kunlun, where oil payments may evade US sanctions reach.

"It's too big to sanction," Hochstein said. "You cannot really sanction China on Iran crude because they have the ability to buy it, they have the mechanism to pay for it and they also have a retaliation mechanism."

China's biggest banks and oil companies are all likely "too big to sanction," according to Elizabeth Rosenberg, director of the energy program at the Center for a New American Security and a former senior sanctions adviser at the Treasury Department. The US will go after smaller Chinese banks and companies for sanctions violations, she said.

"It would be folly to dismiss the ability, or will, of the US administration to target Chinese entities for violating sanctions," she said.

Pompeo Friday announced that eight jurisdictions will receive exemptions from US sanctions on Iranian crude, but did not identify them. Analysts speculate that China is a likely recipient of an exemption.

China imported 665,000 b/d of Iranian crude and condensates through the first nine months of this year, up from 602,000 b/d in 2017, according to cFlow, S&P Global Platts trade-flow software.

In a note Thursday, Sara Vakhshouri, president of SVB Energy International, said she expects roughly 500,000 b/d of Iranian exports to China in November, the majority imported by Zhuhai Zhenrong Corp, a state-owned trading company, and the rest sold to PetroChina and independent refineries.

David Goldwyn, president of Goldwyn Global Strategies and a former special envoy and coordinator for international energy affairs at the State Department, said China will "probably reduce their imports from peak levels to make a show of symbolic responsiveness to the administration."

But Jane Nakano, a senior fellow in the Energy and National Security Program at the Center for Strategic and International Studies, said she expected China "to under-comply at best."

Nakano said that China may be "willing to test the US resolve in enforcing the sanctions."

Like other analysts interviewed this week, Nakano said she believes China may use compliance with US sanctions as a "bargaining chip" in ongoing trade disputes with the US.

"If the Chinese have a reasonable degree of confidence that 'compliance' could lead to alleviating the trade tension, they might materially reduce their Iranian oil imports," Nakano said. "The Chinese decision would in part depend on whether there's some signal from Washington to this effect."

But Rosenberg the US may be hard pressed to offer concessions on tariffs or North Korea sanctions in exchange for Iran sanctions compliance.

"The administration would have to prioritize its various China economic issues, and probably reveal that Iran is not as big a priority as the trade and North Korea issue sets," Rosenberg said. "I don't see the administration wanting to do that."

-- Brian Scheid, brian.scheid@spglobal.com

-- Meghan Gordon, meghan.gordon@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com