Doha [Qatar], May 26: A major diplomatic breakthrough between Washington and Tehran could signal sanctions relief for Iran, a development analysts say bodes well for China, the primary buyer of Iranian oil.
Negotiations have advanced on a proposed 60-day ceasefire extension, the reopening of the Strait of Hormuz and the US side issuing temporary sanctions waivers that would allow Iran to sell oil freely, Axios reported on Saturday, citing a US official. Any such relief would only be implemented under a final agreement, the report added.
Washington is likely to loosen its grip on China's Iranian oil imports, "given that the US-Iran peace talks cannot succeed without Beijing's support," said Wang Yiwei, director of the Institute of International Affairs at Renmin University.
Without Beijing acting as a diplomatic backstop, a deal requiring Tehran to relinquish its nuclear leverage and reopen the strait would leave it with virtually no chips at the negotiating table, Wang said.
US President Donald Trump noted that he had discussed the issue with President Xi Jinping during their mid-May meeting in Beijing and that he was currently weighing whether to ease sanctions on Chinese oil companies buying Iranian crude.
"I'm going to make a decision over the next few days," Trump told reporters aboard Air Force One during his return flight to the US.
If the US were to remove the restrictions on Iran, China would be expected to resume imports from the country, said Han Zhengji, a crude oil analyst at the commodity consultancy JLC Network Technology. China's imports of Iranian oil have fallen sharply in recent months, with deliveries in May down 25 per cent compared with April and 38 per cent lower than in March, according to a Monday report by the US think tank Middle East Forum, citing data from commodity intelligence firm Kpler.
"Diversifying oil import sources is a necessary step to safeguard national energy security. Especially after this US-Iran conflict, China has already increased crude imports from South America and Africa," Han said.
Washington launched its "Economic Fury" campaign in April, aiming to exert maximum pressure on entities and individuals involved in Iranian oil exports. The US has sanctioned Chinese entities that it said were linked to the Iranian oil trade in recent weeks, including one of the country's largest private oil refiners, Hengli Petrochemical (Dalian) Refinery, at the end of April.
Cory Combs, head of supply chain and critical minerals research at Trivium China, said in a podcast hosted by Columbia University's Centre on Global Energy Policy on May 18 that Beijing could tolerate significant sanctions on shadow fleets and teapot refineries with limited exposure to the US dollar.
But Hengli was different, he added, given its significant reliance on the US dollar in global trading. Combs warned Beijing would not hesitate to respond if Washington started sanctioning Chinese banks with similar exposure.
Source: Qatar Tribune