An oil tanker carrying crude oil arriving in Zhoushan, China. (Getty)

September 11, 2019

Chinese oil companies such as Sinopec [SASADZ.UL], CNOOC Ltd and others have managed to reduce their shipments of Iranian oil but it is unclear which Chinese government parties might still be buying Iranian oil, a senior U.S. energy official said on Tuesday.

Dan Brouillette, deputy secretary of the U.S. Department of Energy, told Reuters in an interview that Iranian oil shipments will be monitored and Washington will consider “designating” or blacklisting any identified party who violates the sanctions.

The United States reimposed sanctions on OPEC member Iran last year after pulling out of a 2015 nuclear accord between Tehran and six world powers. In a bid to cut Iran’s sales to zero, Washington in May ended sanctions waivers for importers of Iranian oil.

“We are going to continue this ‘maximum pressure campaign’ because we want Iran to change,” Brouillette said.

“If folks were identified, the Treasury is going to designate them. There are some questions about who (in China) is actually doing the buying … whether it is the Chinese government that is doing the buying,” he said during a visit to Abu Dhabi.

“Sinopec and CNOOC, their shipments have come way down.”

Chinese buyers are wary of taking crude oil from Venezuela and Iran due to escalating sanctions slapped on the two countries by the United States.

But amid growing trade tension with Washington, Beijing in late August imposed 5% tariffs on U.S. crude imports for the first time, from Sept. 1.

The United States is also pressing ahead with raising its oil output, even if that may complicate life for the Organization of the Petroleum Exporting Countries as the group struggles to support oil prices by slashing its crude supply, Brouillette said.

“We are going to promote policies that are going to promote production of energy all throughout the U.S.,” Brouillette said, adding that any potential impact on OPEC or on oil prices is of “no concern.”

The U.S. Energy Information Administration (EIA) projected U.S. oil production would rise to 12.27 million bpd in 2019 from a record 10.99 million bpd in 2018.

Production increases in the Permian Basin and Bakken Shale have been at the forefront of a shale boom that helped make the United States the biggest oil producer in the world, ahead of Saudi Arabia and Russia.

OPEC and its non-OPEC allies, led by Russia, agreed in December to reduce supply by 1.2 million bpd from Jan. 1 this year and the pact will continue until March 2020.

The OPEC+ joint ministerial monitoring committee (JMMC), which includes major oil producers such as Saudi Arabia and Russia, and which reports on compliance with the cuts, is due to meet on Thursday in Abu Dhabi.

But weak crude prices, which have fallen from 2019 high above $75 a barrel in April to around $63 now, may pressure OPEC+ nations to cut even deeper amid concerns about slowing oil demand and economic growth, analysts say.

Reuters

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