Iran Reducing Oil Exports To China, Demanding Higher Price - Reuters
China's oil trade with Iran has stalled as Tehran withholds shipments, demanding higher prices from its top client, Reuters quoted refinery and trade sources as saying.
China's oil trade with Iran has stalled as Tehran withholds shipments, demanding higher prices from its top client, Reuters quoted refinery and trade sources as saying.
The cutback in Iranian oil, which makes up some 10 percent of China's crude imports and hit a record in October, could support global prices and squeeze profits at Chinese refiners.
Early last month Iranian sellers told Chinese buyers they were narrowing discounts for December and January deliveries of Iranian Light crude to between $5 and $6 a barrel below dated Brent, five traders who handle the oil or are familiar with the transactions told Reuters.
Those deals had been struck in November at discounts around $10 a barrel, the traders told Reuters.
The exclusive report did not say how Iran was going to manage its finances, as China is almost the sole buyer of its oil since the United States imposed full sanctions on Iranian crude exports in 2019.
Already Iran faces revenue shortfall despite shipments to China that the Biden administration allowed to surge from a low of around 250,000 barrels per day in 2019 to above one million barrels in 2023. Iran’s currency has fallen to near historic lows, trading at 510,000 rials per dollar, a 12-fold decrease since 2018.
In late December, Iran announced $26.5 billion in oil export revenues in nine months since March, but Iran International’s analysis indicated the number was closer to $22 billion.
A China-based trading executive told Reuters, "This is considered as an extensive default and the order to hike prices apparently came from the headquarters in Tehran, as they're holding back supplies also to the intermediaries."
An executive at a Chinese middleman that procures directly from Iran said Tehran was "holding back some shipments", leading to a "stalemate" between Chinese buyers and Iranian suppliers.
"It's not clear how things would end," this executive told Reuters. "Let's wait a bit and see if refineries are willing to accept the new price."
China has saved billions of dollars buying often deeply discounted oil from sanctioned producers Iran, Venezuela and, more recently, Russia - countries that supply almost 30 percent of China's crude imports.
The abrupt move, which one industry executive called a "default", could also represent the backfiring of an October US waiver on sanctions of Venezuelan oil, which diverted shipments from the South American producer to the US and India, elevating prices for China.
'TEAPOTS' SQUEEZED
It is not clear how extensive Iran's cutbacks to China are. At least one buyer has accepted higher prices: a Shandong-based refiner bought a cargo late last month at discounts between $5.50 and $6.50 on a delivered ex-ship basis, two traders said.
The discounts could narrow further, as the latest offer heard was $4.50, the traders said. Last year's average discount for Iranian Light, a key grade China buys with a high middle-distillates yield, was about $13, traders say.
"The buyers are still struggling to find a solution as the new prices are too high," said a Shandong-based buyer. "But since they have limited choices and the Iranian side is very tough, the room for price negotiations is difficult and is not favoring Chinese buyers."
China's smaller independent refiners, called "teapots", have become Tehran's top clients since first buying Iranian oil in late 2019. They replaced state-run refiners, which stopped dealing with Iran over concerns about falling afoul of US sanctions.
Teapots absorb about 90% of Iran's total oil exports, usually passed off as oil originating in Malaysia or the United Arab Emirates, trade sources say.
Amid the tussle over prices, Iran's overall exports and China's imports from Iran have fallen.
China imported about 1.18 million barrels per day (bpd) of Iranian oil last month, down from 1.22 million bpd in November and 23 percent off October's record 1.53 million bpd, tanker tracker Vortexa Analytics reckons.
That represents the bulk of Iran's global seaborne crude exports, which another tracker, Kpler, estimates at 1.23 million bpd for December, down from 1.52 million bpd in November. Floating storage off Iran and nearby waters rose by about 2 million barrels to 15.5 million barrels over the past week, Kpler says.
"The Iranians want to play catch-up in prices with (Russia's) ESPO. But they don't fully realize the extent of sanctions on Iranian oil is different from that on Russian," said a trading manager at an independent refiner.
Washington has sanctioned more than 180 people and entities related to Iran's petroleum and petrochemical sectors since 2021, identifying 40 vessels as blocked property of the sanctioned entities.
With Exclusive reporting by Reuters
Lawmaker Mohammad Esmail Kosari -- who is a former Revolutionary Guards commander – said this week that it was Soleimani who convinced Russian President Vladimir Putin to join Iran-backed forces in Syria to support the government of Bashar al-Assad in its fight against opposition militias and Islamic State (ISIS).
“With the authority entrusted to him by the political officials of countries, Soleimani engaged in diplomatic efforts, addressing issues in the best possible way. For example, in a meeting with Putin regarding the ISIS issue, he conveyed the concerns and justified the need for Putin to intervene. Putin accepted and joined the Resistance Front,” he said, referring to Iran's proxy militias.
Russia and Iran did indeed become ‘strategic’ allies in Syria, propping up the Assad regime in a brutal campaign that killed at least 300,000 and brought total destruction to large parts of the country.
Kosari added that Soleimani's expertise in irregular wars was also used in Afghanistan. After Afghanistan, he focused on Lebanon, and then organized the forces in Iraq and Syria. “All of these missions were interconnected, and I must say that these missions were assigned to Soleimani by the Supreme Leader,” he added.
After the targeted Killing of Qasem Soleimani in January 2020, former US president Donald Trump described him as “the number-one terrorist anywhere in the world.” “For years, the Islamic Revolutionary Guard Corps (IRGC) and its ruthless Quds Force — under Soleimani’s leadership — has targeted, injured, and murdered hundreds of American civilians and servicemen,” he said, adding, “Soleimani has been perpetrating acts of terror to destabilize the Middle East for the last 20 years.”
In more than two decades at the head of the IRGC’s extraterritorial Quds forces, Soleimani managed to create a loose but effective coalition of forces spanning from Yemen to Lebanon, all with domestic interest but united in their enmity towards Israel and the US.
In the past few days, state-affiliated media in Iran have also published many other accounts of Soleimani’s “achievements” in the region and beyond, including a lesser-known story of his role in the Bosnian war in the early 1990s.
In an interview with the IRGC-affiliated Tasnim News, former commander of IRGC forces in Syria Mohammad Jafar Asadi described how Soleimani got involved in a European civil war almost immediately after taking charge of the Quds Force. He oversaw weapons shipped to the Balkans, where Iran was supporting Muslim Bosnians.
Soleimani’s name once more became ubiquitous in Iran’s state-affiliated media after Hamas’ rampage of Israel on October 7, with many officials hailing the attack as an ultimate fruition of his efforts, while at the same time denying any direct involvement in the planning or execution of the operation.
In a lengthy piece this week, the hardline paper Farhikhtegan said that Soleimani played a crucial role in supplying weapons to Gaza and even the West Bank -- revealed by the US State Department which estimated Hamas alone being funded to the value of $100m annually with tens of millions more to other militias such as Palestinian Islamic Jihad.
Farhikhtegan revealed how Soleimani stressed the importance of domestic production of weapons in Gaza and Yemen -- where Houthis have become a major concern, disrupting the flow of vessels in the Red Sea to and from the Suez Canal. However, this home-grown weaponry, in addition to that smuggled in, still comes in large part from Iranian funding and provisions in addition to training.
In 2021, Iran International published a three-hour confidential interview with Zarif meant to remain in government archives that led to a political storm in Iran. In the interview, Zarif criticized the extent of influence the Revolutionary Guards, particularly the late IRGC commander, had over Iran’s foreign policy. He also claimed that Soleimani's visit to Moscow immediately after the 2015 nuclear deal was forged as an attempt to destroy the nuclear deal. "That trip was made upon Moscow's initiative without the Iranian Foreign Ministry having any control on it. Its objective was to destroy the JCPOA."
On the fourth anniversary of Soleimani's death on Wednesday, twin bombings killed about 85 people who had gathered at his grave in Kerman, prompting Iranians to question how many more casualties the commander would cause even after his death. During Soleimani’s burial procession in 2020, about 60 people were crushed to death in a stampede.
One of the bloodiest incidents surrounding Soleimani’s death happened a few days after his assassination. Only hours after the IRGC had fired more than a dozen missiles at Iraqi bases hosting US troops in retaliation for Soleimani’s killing, the IRGC, responsible for the air defense of the capital Tehran and expecting retaliation from the US, shot down Ukraine's flight PS752 as it took off from Tehran’s Imam Khomeini International Airport, killing 176 people onboard.
Abdollah Naseri, a former CEO of state news agency IRNA, criticized the Islamic Republic authorities for the huge propaganda campaign to portrait Soleimani as a national hero, the commander all but deified by the regime in his absence, from busts and statues in his honor to homages paid to him since his death in 2020. He claimed he has actually been a 30-year burden on the nation without offering anything.
A lot of lives would have been saved if the US had killed Soleimani long ago, Trump said after killing Soleimani, emphasizing that Soleimani had been “perpetrating acts of terror to destabilize the Middle East for the last 20 years.”
“Soleimani is not an icon because he has done nothing for the people of Iran,” Naseri said.