China slow to adjust to Iranian sanctions

UPI: It would take at least three months before China can realistically honor European sanctions on Iranian oil, a research analyst said.
United Press International

HONG KONG, July 24 (UPI) — It would take at least three months before China can realistically honor European sanctions on Iranian oil, a research analyst said.

EU sanctions targeting Iranian oil shipments went into force July 1. They followed similar measures enacted by the U.S. government.

Gordon Kwan, an energy analyst at Mirae Asset Securities in Hong Kong, told Bloomberg News that most Chinese refineries are designed to only process crude oil from Iran.

“Even if China wants to follow the EU sanctions, it will take at least three to six months or early 2013 before we see any meaningful reductions,” he said.

When Iran threatened to choke off shipping lanes through the Strait of Hormuz this year, Beijing opted to put more oil into its strategic reserves at a time when oil prices were in a seasonal decline.

June imports of Iranian crude oil to China ended a three-month period of increase. China is Iran’s largest crude oil customer, though it secured an exemption from U.S. sanctions at the end of June for “significantly” reducing Iranian crude oil purchases. First quarter purchases decreased.