China disclosed its first Iranian oil imports in a year amid talks between between Tehran and world powers aimed at reviving a nuclear accord that could pave the way for lifting U.S. sanctions.
A total of 260,312 tons, or 1.9 million barrels, arrived in December, according to customs data on Thursday. That’s the first time the Chinese central government has reported any purchases from the fifth-largest producer in the Organization of the Petroleum Exporting Countries since December 2020.
Diplomats say that China may tip outcome of the nuclear talks, which also involve France, Germany and the U.K. Beijing’s deepening cooperation with Tehran in the face of U.S. sanctions may have given the Islamic Republic’s government an economic escape route.
“China is testing the waters as the U.S. is presently focused on Russia and the Ukraine,” said John Driscoll, chief strategist at JTD Energy Services Pte in Singapore. “Certainly, Iranians might be one of the most motivated sellers out there, so it will be a natural alliance.”
U.S. President Joe Biden said on Wednesday “it’s not time to give up” on reviving the accord with Iran as progress had been made. If the sanctions are eased, the Persian Gulf country may raise exports, weighing on crude prices.
Oil has gained about 25% since the end of November, with Brent hitting the highest since 2014 this week as stronger-than-expected demand and supply outages tightened the market. Earlier this week, Iran-backed Yemeni fighters launched drone strikes on the United Arab Emirates that caused explosions and a deadly fire, ratcheting up security risks in the oil-exporting region.
Beijing maintains its ties with Tehran are not affected by the U.S. sanctions, and analysts estimate the country remains a big buyer. China was observed to have bought 324 million barrels from Iran and similarly sanctioned Venezuela in 2021, well up on a year ago, according to market intelligence firm Kpler.