Chinese state oil giant Sinopec, Asia’s biggest refiner by capacity, will not buy Iranian oil even after the U.S. waiver on purchases of crude from Iran loaded on tankers as of March 20, a senior Sinopec executive said on Monday.
Sinopec, officially known as China Petroleum & Chemical Corporation, is weighing the potential risks of Iranian oil trade and “basically won’t buy”
Iranian crude, the company’s president Zhao Dong said, as carried by Reuters.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) on Friday issued a general license, which basically authorizes until April 19 imports of Iranian crude loaded on vessels as of March 20. The license even includes authorization of U.S. imports of Iranian-origin crude, amid the frantic attempts by the Trump Administration to curb soaring oil prices.
Reports emerged on Monday that Chinese state refiners are considering the pros and cons of buying Iranian crude which is now ‘unsanctioned’, as is Russian crude already loaded on vessels.
State-controlled refiners in China are considering whether to buy Iranian crude after the U.S. waiver allows legitimate imports again, sources with knowledge of the situation told Bloomberg on Monday.
China has been the biggest and nearly the only buyer of Iranian crude in recent years amid the U.S. sanctions on Iran’s exports, but all these sanctioned barrels were flowing on dark fleets to the independent Chinese refiners. These crude processors, commonly referred to as teapots, don’t care about any sanctions—their primary consideration in choosing supply is the price. The sanctioned Iranian barrels have been sold at much lower prices compared to international benchmarks, due to the illegal activity surrounding shipments and trade.
Chinese state oil refiners, however, have been staying away from Iran’s crude for years to avoid running afoul of the U.S. sanctions.
Sinopec has decided against buying Iranian crude, but it is pushing the Chinese authorities to allow it to tap the massive state petroleum reserves, the refiner’s president said on Monday.
Currently, Sinopec is buying Saudi crude loading from Yanbu on Saudi Arabia’s Red Sea coast. It is also sourcing crude from outside the Middle East, the executive said.
By Charles Kennedy for Oilprice.com
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