China Keeps Gasoline Supply Flowing in Sanctions-hit Iran

China has helped Iran dodge tightening sanctions this year by regularly selling it much-needed gasoline, shipping and trade sources said, but rising tensions could force even some Chinese companies to stop, at least temporarily.

China is the biggest buyer of Iranian crude oil and has condemned US censure of one of its top trading companies for the gasoline trade. Beijing operates free of sanctions imposed by the United States and European Union.

A total of 350,000 tonnes, or around 10 cargoes of gasoline were shipped since the start of the year, shipping and trade sources said. Although an major oil producer, Iran's aging refineries struggle to produce enough fuel and imports are vital to fill the shortfall.

China's state oil traders — Unipec, Zhuhai Zhenrong Corp and Chinaoil - were among the regular gasoline suppliers of Iran, five Gulf-based oil traders said. The companies were not immediately available for comment.

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Chinese companies have emerged as the major gasoline suppliers into Iran, especially after trading houses such as Vitol and Trafigura and major oil companies have stopped doing business with Tehran due to sanctions.

China is set to reduce the amount of crude it will buy from Iran this year, but still will remain a significant buyer and one of Tehran's biggest trading partners.

Its oil trade with Iran is worth some $20 billion a year and its imports rose by 30 percent to a record volume of 555,000 barrels per day (bpd) last year.

While many traders believe this partnership will not budge in the face of Washington's escalating pressure on the international community to stop doing business with Iran, it may put things on hold, at least for a while.

"Basically PetroChina was supplying them all through January but for now that appears to have stopped," one Gulf-based trader said. "Perhaps publicity and new sanctions were just too much for them," he added.

"PetroChina might have stopped as an entity. But they seem to be channeling all the trade through Zhuhai Zhenrong," another Gulf-based trader said.

Washington in January imposed sanctions on the state-run company, which it said was Iran's largest supplier of refined petroleum products.

Traders did not think the sanctions would have an impact on the company's capability to continue selling to Iran.

"They have this company like a cash settlement desk. All the trade they have goes through this company and why would they stop? They're buying Chinese cargoes, ships belong to China and getting the insurance in China," he said.

China denounced US sanctions on Zhuhai Zhenrong Corp, calling Washington's punishment an unreasonable step beyond international sanctions, aimed to curb Tehran's nuclear ambitions, which Western governments say appear aimed at developing the means to make atomic weapons.

Iran says its nuclear activities are legitimate and for peaceful ends.

"In my opinion, the Chinese would never stop supplying to Iran," a third Gulf-based trader said. "They might go quiet for a while, and then a few months later we see an interesting fixture out of Singapore."