♠ Posted by Emmanuel in
China,
Energy,
Middle East
at 10/03/2018 08:36:00 PM
 |
| Hey Sinopec, maybe your new slogan should be "Trump Threatens, Cower in Fear." |
I almost forgot about this one: Sometime ago, I
lauded China for
stating that it would not stop buying crude oil from Iran despite the Trump administration's re-imposition of sanctions. These come despite Iran living up to its commitments under the Obama-era agreement JCPOA (which Trump
unilaterally pulled the United States out of). Apparently, I had spoken too soon. Fast-forward a couple of months and,
lo and behold, China's state-owned energy giant Sinopec has cut back on its Iran purchases by half ahead of a forthcoming tightening of American sanctions:
China’s Sinopec Corp is halving loadings of crude oil from Iran this month, as the state refiner comes under intense pressure from Washington to comply with a U.S. ban on Iranian oil from November, said people with knowledge of the matter.
The sources did not specify volumes, but based on the prevailing
supply contract between the top Chinese refiner and the National Iranian
Oil Company (NIOC), its loadings would be reduced to about 130,000
barrels per day (bpd).
Where did I go wrong in thinking that Beijing would live up to its word by not constraining its state-owned firm from purchasing from Iran? As it turns out, while Sinopec certainly does not conduct much energy-related trade with the United States, its shares are traded as an American depositary receipt (ADR) Stateside. That is, if it does not want to curtail this US-based capital-raising source, then it has to comply with American laws:
This would be 20 percent of China’s
average daily imports from Iran in 2017, dealing a blow to Tehran, which
has counted its top oil client to maintain imports while European and
other Asian buyers wind down purchases to avoid U.S. sanctions.
The cut marks Sinopec’s deepest reduction in years as the Hong Kong and New York-listed state oil company faces direct pressure from a U.S administration determined to choke off the flow of petrodollars to the Islamic Republic.sin
It makes me wonder: If China's bluster about standing up to American bullying rings hollows on importing Iranian oil, will it also be the case with Trump imposing tariffs on more and more Chinese exports? Sinopec was rather lame; will Chinese leadership also be chicken out when threatened with ever-growing lists of goods hit with import taxes?
