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China nominates full contract amount of Iran oil in August
China expected to load about 16 mln barrels of Iranian oil in Aug; Monthly volumes seen largely steady for rest of year; China in freight talks with Iran tanker firm as vessel costs vary
August 7, 2012 3:37 by Reuters
China, Iran’s top oil customer and trading partner, has nominated full contract volumes of Iranian crude for loading this month, steady with July, trade sources said, after imports from the Middle Eastern country hit an all-month high in June.
China is expected to load just over 16 million barrels of Iranian oil in August, the second month that it is using the vessels of National Iranian Tanker Co. (NITC) to deliver oil to its ports to get around a European Union insurance ban.
Iran’s oil exports halved in the four months from February to June because of sanctions aimed at choking off oil revenue and forcing Tehran to curb its nuclear programme, which the West believes is aimed at developing weapons, a motive Iran denies.
“The volume for August has been confirmed,” said a Beijing-based oil official with direct knowledge of the matter.
“For the rest of the year, the volumes should be largely steady each month. We are not expecting big fluctuations,” said a second official.
Both declined to be named because company policy forbids it.
China, Iran’s biggest trading partner, in July loaded a similar amount of Iranian oil, or roughly 520,000 barrels per day (bpd), a level at which China would account for around half of Iran’s total July exports of about 1.1 million bpd.
The full contractual volume of July loadings followed surprisingly high imports in June, which were the highest in nearly a year as reported by Chinese customs. Some traders believed it was a one-off skewing in the data tally, while others suspected China might have taken in extra bargain oil.
The EU sanctions that took effect on July 1 forced China to ask NITC to deliver crude, as Chinese vessels can no longer buy cover from the European insurers who dominate the sector.
Chinese firms would still need to negotiate with NITC the freight cost for each vessel for August loadings as the cost of each ship varies. But both sides expected the talks to be smoother than in July, when a freight dispute briefly threatened to delay the shipments.
“So far two vessels have already been loaded,” said the first official.
(Editing by Clarence Fernandez)