New U.S. sanctions targeting a Chinese refinery and tankers involved in Iranian oil trade are expected to temporarily reduce China’s imports of discounted Iranian crude, but traders predict buyers will find workarounds to maintain flows. The sanctions, announced Thursday, mark the fourth round under President Donald Trump’s “maximum pressure” campaign aimed at curbing Tehran’s oil exports.
Key Developments:
Sanctions Impact: Shouguang Luqing Petrochemical, a major independent refinery in Shandong, and associated tankers were sanctioned, driving up shipping costs and complicating trade logistics.
Import Volumes: China’s Iranian oil imports rebounded to 1.43 million bpd in February but may decline sharply in March due to the latest measures.
Market Response:
Chinese Buyers: Traders expect refiners to adjust payment structures and rebrand cargoes to circumvent sanctions, ensuring continued imports.
Economic Incentives: Discounted Iranian oil saves Chinese refineries billions annually, providing strong motivation to maintain trade despite sanctions.
Geopolitical Context:
China’s Stance: Beijing opposes “indiscriminate and illegal” unilateral sanctions and vows to protect its companies’ trade rights.
U.S. Strategy: The sanctions aim to pressure Iran but stop short of targeting Chinese ports, limiting their immediate impact.