Baku, Azerbaijan, Oct. 29
By Rashid Shirinov – Trend:
The new US sanctions against Iran in early November will definitely eat some of Iran's oil market share, but how big the blow will be depends mostly on China, Gal Luft, the co-director of the Washington-based Institute for the Analysis of Global Security, told Trend.
“On the one hand China is Iran's best place to seek increased market share for its oil. China is in no mood to accommodate Washington in light of the recent tension between the countries,” the expert said.
He noted that China's oil imports from the US have dropped to near zero and in theory Iran could replace some of the American crude. China is also ready to take advantage of the withdrawal of the French Total and take over its gas field in the country, according to Luft.
“However, due to Iran's lack of LNG infrastructure China is not able to replace US LNG with Iranian. Iranian gas can either be shipped to China via Turkmenistan or through swap deals with Russia,” the expert added.
He noted that similar arrangement with Russia can be done on oil. Iranian crude can be processed in Russia, sent to China and the money from the products can be recycled back to Iran.
“However, China has not yet made up its mind how to address the situation. China hopes to settle its dispute with the US in the end of November when Presidents Trump and Xi meet in Argentina,” Luft said.
He believes that China may want to create some goodwill prior to the meeting in the hope of creating the best conditions for a trade settlement. "To this end Chinese refiners have already suspended their orders of Iranian crude for November shipment."
“Therefore, the outcome of the meeting will determine China's next steps. If the meeting is good, China is expected to reduce its oil purchases from Iran and even replace them with American crude,” the expert noted.
"If the meeting fails, China is expected to increase its crude orders from Iran and provide it with a lifeline," he added.
