This year’s turbulent events in the Middle East—a major source of oil supply for the world’s largest oil importer, China—have had Beijing scrambling to salvage the Iran nuclear deal after the U.S. assassinated Tehran’s top military commander.
At the same time, China has significantly reduced its crude oil imports from Iran in recent months because of the U.S. sanctions on Iranian oil exports.
China doesn’t need Iran’s oil as much as it used to, Kenneth Rapoza writes for Forbes.
Yet, China is interested in having crude oil supplies from the Middle East uninterrupted and oil prices not too high so it can continue importing record amounts of crude oil.
So China is appealing for calm in the Middle East and says it is doing everything it can to save the Iran nuclear deal.
China, Russia, and Europe stayed in the so-called Iran nuclear deal after the United States withdrew from it and re-imposed sanctions on Iran’s oil exports.
The killing of Iran’s most powerful and visible military leader, Qassem Soleimani, forced Iran to end its pledges under the deal, but it has shown restraint and willingness to not violate its non-proliferation obligations, Geng Shuang, a spokesman for China’s foreign ministry, said at a press conference earlier this week, as carried by South China Morning Post.
“China urges the US to seek resolutions through dialogue instead of abusing force. China will continue to uphold an objective and just position and play a constructive role in safeguarding peace and security in the Gulf region of the Middle East,” China’s State Councilor and Foreign Minister Wang Yi said in a telephone call with Iran’s Foreign Minister Javad Zarif in the weekend.
The Chinese minister also spoke to his French counterpart and said in that conversation that “It is of vital importance to maintain the JCPOA under the current circumstances.”
The Iran nuclear deal, as the Joint Comprehensive Plan of Action (JCPOA) is commonly known, “is also a key pillar for peace and stability in the Middle East,” Wang Yi said.
Currently, the Middle East is anything but stable, with the U.S.-Iran standoff reaching a new high late on Tuesday after Iran fired ballistic missiles at U.S. bases in Iraq, in apparent retaliation for the killing of Soleimani.
As the world’s largest oil importer and a key buyer of Middle Eastern oil, China is interested in continuous oil flow out of the Middle East. Therefore, any threat to supply, be it at facilities or along the shipping lanes, including the most important oil chokepoint in the world, the Strait ofHormuz, could threaten China’s oil imports.
China may have cut back on Iranian oil imports, but it continues to rely on Middle Eastern oil producers for a large part of its crude oil imports.
The world’s biggest oil exporter and Iran’s bitter rival in the Middle East, Saudi Arabia, saw its crude oil sales to China surge by 76 percent year on year in October, driven by increasing demand and U.S. sanctions restricting Chinese imports of Iranian and Venezuela crude.
China’s imports from Saudi Arabia jumped to a record high in January-November, surging by 53 percent year on year, according to Chinese customs data reported by Caixin Global.
While Saudi Arabia easily beat Russia to the top spot of Chinese crude oil suppliers at the end of last year, China’s imports of Iranian oil slumped by 47 percent annually between January and November.
Despite the U.S. crackdown on Chinese tanker companies dealing with Iranian oil, China continues to import oil from the Islamic Republic, but in much smaller volumes than it used to, before the U.S. ended all waivers for all Iranian oil customers in May last year.
China’s appeals for restraint and avoiding the use of force in the Middle East align with its interest to have oil supply uninterrupted and oil prices in a relatively stable range without price spikes.
By Tsvetana Paraskova for Oilprice.com