In the first half of last year, China bought 543,000 barrels a day of Iranian oil. Official figures show purchases in February came to 290,000 barrels a day, a reduction of 47 percent.
China says it is ignoring American sanctions and will have nothing to do with them. But oil importers say they are displeased with Iran’s contract terms and have reduced purchases since the start of the year while demanding new terms.
The only change that the Chinese firms have announced demanding is a 90-day credit period in which to pay for their buys as opposed to the 60-day period in last year’s contracts.
The implication is that Chinese purchases will rise back up to last year’s levels once the problem is solved. But industry analysts are just scratching their heads at why Iran would refuse such a modest contract change. It already gives many countries—such as Greece—90-day payment terms, so the concession demanded by the Chinese would not set any precedent.
Many think there is something more to the Chinese cuts. Some speculate the Chinese firms are demanding a price cut. Others suspect the Chinese government is pressuring Iran to meet IAEA demands about its nuclear program
The Chinese reduction of a quarter million barrels a day amounts to a sizable 10 percent of all of Iran’s crude oil exports last year.