China last year doubled down on imports of Iranian and Venezuelan crude, taking the most from the US-sanctioned regimes in three years, as refiners brushed off the risk of penalties to scoop up cheap oil.
Crude processors in the world’s biggest importer were observed to have bought 324 million barrels from Iran and Venezuela last year, about 53 percent more than a year earlier, data from market intelligence firm Kpler showed.
That is the most since 2018, when China took 352 million barrels from the two nations.
Chinese buyers, especially private refiners, have benefited from Washington’s tough line on Iran and Venezuela, continuing to buy their oil long after their counterparts elsewhere in Asia ceased purchases.
The risk that non-US entities might lose access to the US financial system or have their US assets frozen if found guilty of breaching the sanctions has not dissuaded them.
A glut of unsold cargoes, rising international prices and the issuance of more crude import quotas by Beijing, have incentivized the private refiners, known as “teapots,” to snap up more oil from the pariah states.
The shipments typically do not show up in official customs data.
The US eased sanctions enforcement as it tried for a nuclear deal with Iran, said Anoop Singh, head of tanker research at Braemar ACM Shipbroking Pte Ltd.
Sanctioned oil is usually transported on old ships that would have otherwise been sent to scrapyards, providing cost savings, he said.
Cargoes can be shipped directly from the country of origin on tankers that have “gone dark” — meaning their transponders are turned off — or transferred between vessels at sea, he said.
Crude oil from Iran and Venezuela is often rebranded and passed off as oil from Oman or Malaysia.
China has not received any Iranian crude since December 2020, while imports from Oman and Malaysia have risen, official data showed.
Chinese imports of sanctioned crude should stay elevated at about current levels early this year amid slow progress on the nuclear talks, Braemar and industry consultant Energy Aspects Ltd said.
The price of sanctioned oil would always be discounted, said Emma Li, a Singapore-based analyst at Vortexa Ltd.
“For teapots, the incentive is always the low price, compared with other popular grades,” she said.
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