Tugboats dock the oil tanker "Daniel" carrying crude oil imported from Iran at the Port of Zhoushan in Zhoushan city, east China's Zhejiang province, 8 March 2018. Imaginechina | AP Images China and India are both unlikely to completely cut off Iranian crude imports, energy analysts have said, despite the imminent threat of U.S. sanctions. President Donald Trump's administration announced Monday that buyers of Iranian oil must stop purchases by May 1 or face sanctions. The move, which took many market participants by surprise, ends six months of waivers which had allowed Iran's eight biggest buyers of crude to continue to import limited volumes. International benchmark Brent crude traded at $74.26 Tuesday afternoon, up around 0.3%, while U.S. West Texas Intermediate (WTI) stood at $65.93, almost 0.6% higher. "Iranian exports will not actually reach zero," analysts at Eurasia Group said in a research note published Monday. "China, which imports approximately 500,000 bpd (barrels per day), will make considerable cuts in the near term. For Beijing, securing the trade agreement with the U.S. is the top priority, and China will not link Iran oil imports to the trade talks." China 'can't and won't back down' China is Iran's largest crude oil customer, with total imports last year of approximately 29.3 million tons or about 585,400 bpd, according to customs data sourced by Reuters. That's roughly 6% of China's total oil imports. On Tuesday, China's Foreign Ministry reportedly said it had formally complained to the U.S. over its decision to end waivers on sanctions of Iranian oil imports. Beijing said it was resolutely opposed to the move, adding its energy cooperation with Tehran is lawful and reasonable. Alongside India and six others, China was one of the eight global buyers of Iranian crude that won exemptions from the U.S. last November. Chinese President Xi Jinping and U.S. President Donald Trump attend a welcome ceremony at the Great Hall of the People in Beijing on Nov. 9, 2017. Fred Dufour | AFP | Getty Images The dispute over importing Iranian crude adds another fault line to increasingly fraught ties between Washington and Beijing. The world's two largest economies have been locked in a protracted trade war, souring business and consumer sentiment and battering financial markets. Nonetheless, despite the threat of sanctions and a heightened risk of further complications in the long-running trade conflict, analysts at Eurasia Group said they expect China to continue buying Iranian crude, perhaps as high as several hundred thousand barrels per day, to save face. "We think that China can't and won't back down this time and we could easily see an increase of Chinese oil imports from Iran up towards maybe 1 million bpd," Bjarne Schieldrop, chief commodities analyst at SEB, said in a research note published Tuesday. "There will also be an increasing amount of oil exports out of Iran which will go 'under the sanctions radar'… It will drive Iran closer to China and enable China to settle yet more oil in renminbi," Schieldrop added. India's ties with Iran are 'significant and historic' India will likely take a similar position to China, Eurasia Group analysts added. New Delhi is the second-largest importer of Iranian oil, after Beijing. "New Delhi will cut imports substantially but probably maintain approximately 100,000 bpd of Iranian imports paid for using a rupee payment system. This is less an energy security decision than a political one." "In the past several months India has worked hard to significantly diversify its energy sources in preparation for this situation. But India's ties with Iran are significant and historic, and New Delhi will work hard to maintain some links," Eurasia Group analysts said. Minister of Petroleum & Natural Gas and Skill Development & Entrepreneurship, Dharmendra Pradhan gestures as he brief the media about the achievements of Ministry of Petroleum & Natural Gas and Ministry of Skill Development & Entrepreneurship in past 4 years at Shastri Bhawan on June 6, 2018 in New Delhi, India. Vipin Kumar | Hindustan Times via Getty Images<doc-sep>Read Also NEW DELHI: India will stop importing crude oil from Iran following the US move to end sanction waivers, and will use alternate supply sources such as Saudi Arabia to make up for the lost volumes, top officials and industry sources said on Tuesday. The Trump administration on Monday decided not to renew waiver that let countries like India buy Iranian oil without facing US sanctions. "Until the waivers are not restored, I don't think India can buy oil from Iran. We will stop importing oil from Iran," a top official said.New Delhi is likely to press the US government for continuation of oil import beyond its expiry on May 2 in talks scheduled later this month, he said. "But purchases cannot be made in anticipation. We will not be importing any oil from Iran. "India was the second biggest buyer of Iranian crude oil after China. It bought some 24 million tonnes of crude oil from Iran in the fiscal ended March 31 (2018-19). Iran supplied more than a tenth of its oil needs.The shortfall will be made from alternate supply sources available in Saudi Arabia, Kuwait , UAE and Mexico.Oil minister Dharmendra Pradhan in a tweet said "a robust plan for an adequate supply of crude oil to Indian refineries " is in place. "There will be additional supplies from other major oil-producing countries; Indian refineries are fully prepared to meet the national demand for petrol, diesel & other petroleum products," he said.The oil ministry too in a statement said that a plan was in place to ensure supplies of crude oil from May when the waiver ends.Indian Oil Corp ( IOC ) chairman Sanjiv Singh said refiners import crude oil from a wide range of sources and had been lining up alternate supplies for the past months.The US was to take a decision on waiver extension this month and Indian refineries had prepared plans for all eventualities. "We have alternate sources lined up to make up for any shortfall," he said.US President Donald Trump last year withdrew from the 2015 nuclear deal between Iran and world powers, and revived a range of sanctions against the Persian Gulf nation. It, however, granted a six-month waiver from sanctions to eight countries - China, India, Japan, South Korea, Taiwan, Turkey, Italy, and Greece - but with a condition that they would reduce their purchases of Iranian oil.The waiver began in November 2018 and was to expire on May 2.India had agreed to restrict its monthly purchase to 1.25 million tonnes to get the waiver. But since it had made robust purchases in the period prior to November 2018, India's overall crude oil imports from Iran totalled nearly 24 million tonnes in 2018-19 as compared to 22.6 million tonnes bought in 2017-18. "We have optional volumes (over and above the term contracts) from a number of suppliers which we can exercise to make up for any shortfall from Iran," Singh said. "We can also go to the spot (or current) market to source crude. ""As far as Indian Oil is concerned, supplies will not be a problem. We have already lined up alternate sources," he said, adding the impact of the US decision may reflect on global oil prices which may temporarily go up.IOC has the option to take 0.7 million tonnes of crude oil from Mexico on top of its committed purchase of 0.7 million tonnes during the year. From Saudi Arabia, it has an optional volume of 2 million tonnes on top of a term contract of 5.6 million tonnes.Similarly, it has optional volumes of 1.5 million tonnes from Kuwait and another 1 million tonnes from the UAE. "We have all the supplies tied up and I think globally crude will be readily available but it is difficult to say what the impact will be on price," he added.The price of Brent crude , the global oil benchmark, gained 0.6 per cent to $74.46 a barrel, the highest in almost six months. It had risen by 3 per cent on Monday.When Trump first pulled out of the nuclear deal, oil shot up to over $85 a barrel and it fell to near $50 after the US administration unexpectedly granted the waivers.US sanctions on Iran's oil buyers snap back next month that will block the American financial system for importers.India, the world's third-biggest oil consumer, meets more than 80 per cent of its oil needs through imports. Iran in 2017-18 was its third-largest supplier after Iraq and Saudi Arabia and meets about 10 per cent of total needs.Trump in May withdrew from the 2015 nuclear accord with Iran, re-imposing economic sanctions against the Persian Gulf nation. Some sanctions took effect from August 6, while those affecting the oil and banking sectors were to start from November 5, 2018. A six-month waiver was granted that was to expire on May 2.Iran was India's second biggest supplier of crude oil after Saudi Arabia till 2010-11 but Western sanctions over its suspected nuclear programme relegated it to the seventh spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 million tonnes and 10.95 million tonnes, respectively from it.Sourcing from Iran increased to 12.7 million tonnes in 2015-16, giving it the sixth spot. In the following year, the Iranian supplies jumped to 27.2 million tonnes to catapult it to the third spot.Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, terms not available from suppliers of substitute crudes -- Saudi Arabia, Kuwait, Iraq, Nigeria, and the US.<doc-sep>Trump said electing Biden would crash the markets. It didn't WASHINGTON, DC - DECEMBER 12: U.S. President Donald Trump departs on the South Lawn of the White House, on December 12, 2020 in Washington, DC. Trump is traveling to the Army versus Navy Football Game at the United States Military Academy in West Point, NY. (Photo by Al Drago/Getty Images) A Tesla car charges at a Tesla Supercharger station on April 26, 2021 in Corte Madera, California. Tesla will report first quarter earnings today after the closing bell. (Photo by Justin Sullivan/Getty Images) An Amazon.com Inc. delivery driver carries boxes into a van outside of a distribution facility on February 2, 2021 in Hawthorne, California. Jeff Bezos said February 1, 2021, he would give up his role as chief executive of Amazon later this year as the tech and e-commerce giant reported a surge in profit and revenue in the holiday quarter. The announcement came as Amazon reported a blowout holiday quarter with profits more than doubling to $7.2 billion and revenue jumping 44 percent to $125.6 billion. (Photo by Patrick T. Fallon/AFP/Getty Images) This photograph taken on March 3, 2021 in Zurich shows a sign of Swiss banking giant UBS on their headquarters. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images) Warren Buffett, CEO of Berkshire Hathaway, attends the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019. (Photo by Johannes EISELE / AFP) (Photo credit should read JOHANNES EISELE/AFP via Getty Images) CEO at Verizon Media K. Guru Gowrappan appears at the 2019 Verizon Media NewFront on April 30, 2019 in New York City. IMAX CEO: Box office sales in Asia bode well for US theaters Economist: Work from home will be the future for a 'lucky minority' markets now future of work from home Indeed Chief Economist Jed Kolko_00005106.png This photograph taken on April 26, 2021 in Paris shows a physical imitation of the Bitcoin crypto currency. In this photo provided by the New York Stock Exchange, traders work around stock monitoring systems on the trading floor, Wednesday, May 12, 2021, in New York. Inflation worries rattled Wall Street on Wednesday, pulling the Dow Jones Industrial Average more than 680 points lower and placing the major stock indexes on track for their worst week in more than six months. (Courtney Crow/New York Stock Exchange via AP) A visual representation of the digital Cryptocurrency, Bitcoin on December 07, 2017 in London, England. Here's why used car prices are so high Crude prices up as US vows to stifle Iran on oil exports (CNN Business) — China is pushing back against the United States’ decision to broaden its crackdown on Iranian oil exports, deepening the uncertainty in the global oil market. Beijing on Monday slammed the Trump administration’s announcement that it would stop exempting several countries from its sanctions on buying oil from Iran. China is one of the world’s biggest importers of Iranian oil, along with India. “China opposes the unilateral sanctions and so-called ‘long-arm jurisdictions’ imposed by the US,” Chinese foreign ministry spokesperson Geng Shuang said during a press briefing Monday. “Our cooperation with Iran is open, transparent, lawful and legitimate, thus it should be respected,” he added. The sanction waivers were granted to China and seven other countries last year. They are set to expire May 2. China wasn’t the only one of those countries to rebuke the Trump administration’s latest decision. “Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbors,” that country’s foreign minister Mevlut Cavusoglu said Monday on Twitter. The sanctions could have significant consequences for those two countries in particular. Analysts say China and Turkey will struggle the most to reduce their Iranian oil supplies, particularly within such a short time frame. “I think China and Turkey will be the two that will be the most worrisome, and will be the most vexed by this action,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. He described the US move as “very disruptive.” “I don’t think we saw this as becoming zero tolerance so quickly,” he added. US Secretary of State Mike Pompeo said Monday that countries continuing to buy crude oil from Iran beyond the May deadline would have to face the consequences. “We’ve made clear if you don’t abide by this there will be sanctions,” he said. Still, analysts say China is unlikely to completely stop importing oil from Iran. “We are debating whether or not China will cease their imports. We’re leaning towards they won’t,” Matt Sallee, portfolio manager at energy investment firm Tortoise, told CNN Business. India, meanwhile, said it will be able to offset the reduction in Iranian exports, even though it has previously said that it only recognizes sanctions by the United Nations. “There will be additional supplies from other major oil producing countries,” India’s petroleum minister Dharmendra Pradhan said on Twitter overnight. “Indian refineries are fully prepared to meet the national demand,” he added. Iran is the South Asian nation’s third-largest supplier of crude oil, behind Iraq and Saudi Arabia. Washington’s decision not to renew the sanction waivers sent US oil prices shooting up nearly 3% on Monday. Brent crude, the global benchmark, also surged 3.4% to hit $74 a barrel for the first time since early November. That spike is likely to continue, since the cutting off of Iranian supply adds to ongoing issues with other major suppliers like Venezuela and Libya. Monday’s announcement “moves oil markets into much tighter territory for the remainder of the year,” said Shin Kim, head of supply and production analytics at energy research firm S&P Global Platts. “The market’s spare capacity will largely be spent covering for Iran,” Kim said, adding that the heightened risks to global supply means “oil prices will be higher.” CNN Business’ Matt Egan contributed to this report.<doc-sep>“We’re going to zero,” Mr. Pompeo said. “We’re going to zero across the board.” The United States and China have been closing in on an agreement that would cover a wide range of trade issues. Negotiations are expected to continue over the next two weeks, first in Beijing and then in Washington, to resolve several sticking points, including removing current tariffs. If those gaps are bridged, the two sides will look to schedule a signing meeting between Mr. Trump and President Xi Jinping of China in May or June, said a person who has been briefed on the talks and spoke on the condition of anonymity to discuss them. Any move by Beijing to keep buying Iranian oil — which analysts predicted China almost certainly will find some way to do — would force the United States to decide whether to impose sanctions on Chinese financial institutions, which are increasingly important in the worldwide economy. China could also set up a new vehicle as an alternative to using the current banking mechanisms, as the European nations have done to keep doing some business with Iran. “Iran sanctions are going to be a big challenge for the U.S.-Chinese relationship,” said Jason Bordoff, the director of Columbia University’s Center on Global Energy Policy and a former energy adviser to President Barack Obama. He added that if Chinese imports do not drop quickly, the American sanctions could be applied to Beijing’s central bank, the People’s Bank of China. The United States and China are already at odds over an incendiary case involving Iran sanctions. In January, Canadian authorities arrested a top Chinese technology executive, Meng Wanzhou, at the Vancouver airport at the request of American officials. The Justice Department is seeking her extradition to face charges of helping her company, Huawei, evade sanctions on Iran in a scheme that involved tricking American banks. That case has been criticized by Chinese officials, who have said it is motivated purely by politics. It also heightened fury and grievances from the Chinese government over sanctions imposed by the United States on Iran in the administrations of both Mr. Obama and Mr. Trump. Chinese companies have many business ties to Iran.<doc-sep>
The United States on Monday said it will not extend sanctions exemptions to countries importing oil from Iran when they expire in early May. It means countries and companies trading with Iran without Washington's consent risk US sanctions and getting cut off from the American financial system. Washington had reimposed sanctions on Iran in November last year after President Donald Trump pulled the US out of the landmark nuclear deal struck between Iran and six global powers. But the US had granted waivers, known as significant reduction exceptions (SRE), which allowed India and seven other countries to continue importing a reduced quantity of Iranian oil for six months ending May 1. At the time, the US said it would temporarily allow eight importers to keep buying Iranian oil and that it would expect them to keep cutting Iranian imports in the months ahead. US Secretary of State Mike Pompeo said then that the temporary waiver was because the countries "have demonstrated significant reductions in their crude oil and cooperation on many other fronts and have made important moves towards getting to zero crude oil importation" from Iran. The US move now to scrap waivers is intended to bring Iran's oil exports to zero and deny Tehran its main source of foreign revenue. Iran's exports of crude in March totaled about 1.3 million barrels a day, data compiled by Bloomberg show. Shipments already came down from as high as 2.5 million barrels daily in April last year. High reliance India is one of the countries likely to be the hardest hit by the US decision. India is the world's third-biggest oil consumer, but its energy needs are primarily met through imports. The South Asian nation imports almost 80% of its oil requirements and Iran is its third-largest supplier, contributing over 11% of its crude oil demand. In the fiscal year 2018-19, India imported about 23.5 million tons of Iranian oil. Still, refiners in India, Iran's top oil client after China, had almost halved their Iranian oil purchases since November when petroleum sanctions came into force. While it's not impossible to find other sources of oil, observers say it would raise costs and potentially strain India's partnership with Iran. India's imports of Iranian oil come with attractive terms, including 60-day credit and low freight and insurance costs, say analysts. And New Delhi might find it tough to find an alternative supplier at such competitive terms. Also, the Trump administration's move prompted a spike in global oil prices, which hit their highest since November on Tuesday after Washington's announcement on Iran waivers. An increase in oil prices is likely to put pressure on India's fiscal and current account as well as drive up inflation. India is the world's third-biggest oil consumer, but its energy needs are primarily met through imports 'Robust' plan Although Indian Foreign Minister Sushma Swaraj last year said "India follows only UN sanctions and not unilateral sanctions by any country," local media reports suggest that India will stop importing crude oil from Iran and will try to find alternative sources to make up for the lost volumes. "Until the waivers are not restored back, I don't think India can buy oil from Iran. We will stop importing oil from Iran," a top official was quoted by Indian business daily livemint as saying. India's petroleum ministry also issued a statement assuring of a "robust" oil import plan starting from May. "The Government of India has put in place a robust plan to ensure that there is adequate supply of crude oil to Indian oil refineries from May 2019 onwards. There will be additional supplies from other major oil producing countries from different parts of the world," the ministry said in a statement on Tuesday. "The Indian refineries are fully prepared without any problem to meet the national demand for petrol, diesel and other petroleum products in the country," the ministry added. India's Petroleum and Natural Gas Minister Dharmendra Pradhan tweeted on Tuesday, saying that the country will get additional supplies from other major oil producing countries to compensate for the loss of Iranian oil. Following the US decision, India may try to increase its supplies of oil from countries like Saudi Arabia and the United Arab Emirates. Reuters last week reported that Indian refiners are increasing their planned purchases from the nations of the Organization of the Petroleum Exporting Countries (OPEC), Mexico and the United States to hedge against loss of Iranian oil.