Last week, it was revealed that Chinese companies sold oil products to Iran, highlighting China’s continued efforts to undermine global measures to stabilize the rogue nation and its influence on the Middle East.
“Chinese state companies this month began supplying petrol to Iran and now provide up to one-third of its imports in a development that threatens to undermine U.S.-led efforts to shut off the supply of the fuel on which its economy depends,” the Financial Times reported.
Iran, a top oil-producing country, lacks petroleum refining capacity and exports its crude oil. In turn, it imports refined fuel from other countries.
The Financial Times quoted Lawrence Eagles, head of commodities research at JP Morgan, as saying that Iran receives 30,000 to 40,000 barrels of Chinese refined oil daily. Traders suggested that Iran imports about 120,000 barrels of the refined product, of which between 25 and 33 percent are from China.
Trading oil with Iran is not yet illegal, yet the Chinese use Asian intermediaries to supply refined oil to Iran, thereby reducing transparency.
Although a Chinese representative in Washington D.C. told the Financial Times that “Chinese enterprises conduct normal trade relations with Iran, strictly speaking within the relevant UN resolutions,” the media has been awash with suggestions that China will try to undercut any effort by the United States to stabilize the global community.
Oil Sales to Iran
China is not the only country selling oil to Iran. According to media reports, Iran receives the majority of its refined oil imports from India’s Reliance Industries Limited, the Swiss firms Vitol Group and Glencore International AG, Total S.A., BP Plc, and Trafigura. According to BP representatives, the British oil company has since halted petroleum sales to Iran.
Venezuela President Hugo Chavez said earlier this month that his country would supply Iran with 20,000 barrels of refined oil a day, which accounts for about 16.7 percent of Iran’s total daily refined oil imports.
"Venezuela has agreed to export 20,000 barrels of petrol daily to Iran from October in a deal worth $800 million," Chavez shared with local media in the northeastern city of Mashhad.
Iran is actively expanding its refining capacity and hopes to totally eliminate refined oil imports by 2012, according to Energy Information Administration (EIA) statistics. While Iran’s local oil demand is for gasoline and diesel, the government is promoting natural gas usage to reduce its need for such imports.
The National Iranian Oil Refining and Distribution Company refined about 1.5 million barrels per day via nine refineries in 2008.
“Iran plans to increase refining capacity to around 3 million bbl/d [barrels per day] by 2012. This increase, through expansions at existing refineries as well as planned grass-root refinery construction, could eliminate the need for imports by 2012,” the EIA said.
China’s Game Plan
China’s oil sale to Iran is one more example of China taking its own counsel, regardless of its responsibility to the interests of the world community.
Analysts opined that it is in China’s best interest to play countries against each other and undermine anything that could affect its economic and political interests.
Concerning Iran, President Barack Obama called relations with Iran to be “a vital issue” and important to U.S. national security interests.
Regarding China’s position on Iran, a White House official said, “I'd really not—I mean, I really think it's the Chinese responsibility to answer the questions. I just—as a matter of principle, I don't want to answer for the Chinese.”