Azerbaijan, Baku, June 25 /Trend S.Isayev/
The U.S. government's decision to exempt India but not China from the sanctions, was a clear message that Chinese firms were soon to be included in the list of sanctioned firms with serious financial and market-access consequences for them, EU economic advisor Mehrdad Emadi told Trend.
The advisor was commenting on how China will continue to deal with Iran's oil imports, while not being included in the list of U.S. exempted countries that significantly reduced their oil imports from the Islamic Republic.
"One can see how Chinese firms have weighed the benefits of buying oil from Iran, be it at attractive discounts, against financial penalties but much more important to them, reduced access to the U.S. market and new obstacles in their trade with the EU," Emadi added.
On June 12, U.S. officials said India, South Korea, Turkey, Taiwan, Malaysia, South Africa and Sri Lanka had reduced their purchases of Iranian crude sufficiently to cut Tehran's exports without upsetting global oil prices.
In March, the Obama administration similarly exempted 10 European countries and Japan from sanctions, saying they too had done enough to wean themselves from Iranian energy.
Two importers of Iranian oil that have not yet been granted exemptions are China and Singapore.
China, which alone buys as much as a fifth of Iran's crude exports, and Singapore, where much of the country's fuel oil is blended, did not receive such waivers, ramping up pressure on two important U.S. trade partners in Asia.
Tehran's top customers, China, Japan, South Korea and India, have all cut imports this year as sanctions make it impossible to finance the deals, find tankers and arrange insurance cover to ship the crude.
China's Sinopec has said to be importing from 16 to 20 percent less of oil from Iran this year compared to 2011.
"The decision to reduce import of oil from Iran should be seen in the structure of the proposal made to the main buyers of oil from Iran," Emadi said.
Emadi added that recent decisions of the U.S. government suggest that it may be possible for the importers of oil from Iran to escape the new sanctions if they demonstrate that they are implementing schemes which reduces their oil purchase by around 20 percent.
He said if the same benchmarks as with other exempted countries are applied to China, a reduction of 20 percent in their purchase of oil from Iran accompanied with a rapid reduction in the presence of Chinese firms in the Iranian oil and gas projects should suffice to pave the way for the exemption of China from the forthcoming sanctions.
On June 20 Reuters reported that China's Unipec, trading arm of top Asian refiner Sinopec Corp, has requested Iran to deliver July-loading crude cargoes to Chinese ports, ahead of a European insurance ban on Iranian oil exports that takes effect from July 1.
China has yet to work out a permanent way to obtain cover for China-flagged tankers that have been transporting at least part of the Iranian oil.
EU Advisor believes a more important question may be whether China will follow the same route as South Korea and India, which is finding alternative supply sources to further reduce their oil dependency on Iran.
"Given the rather unique nature of the relationship between China and Iran which has granted unrivaled access to Iranian market to Chinese firms, this may be a more complex source of contention than it was with India and South Korea," Emadi underscored.
He admitted however that it may be safe to assume that despite the special concessions Chinese have gained from Iran in all areas of commerce, China is most unlikely to seriously risk a trade war or any form of commercial confrontation with the United States and the European Union over Iran.
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