Iran ships oil to China: sources

BEIJING/TOKYO - Reuters

REUTERS photo

Oil tanks are seen at a plant owned by Sinopec, the biggest buyer of Iranian oil.

Iran is shipping oil to China, its top buyer, despite a row over freight terms, and Japan has taken steps to resume imports in August as Tehran finds ways to get around Western sanctions on ship insurance for its drastically reduced shipments.

EU sanctions against Tehran have stopped European insurers, who dominate the marine insurance sector, from offering cover on Iranian crude. The lack of cover has disrupted flows of Iranian oil to Iran’s major customers in Asia - China, India, South Korea and Japan - at a time when the EU has stopped buying its oil altogether. Japan has completely halted imports in July because of the lack of cover, and China requested that Iran deliver oil on its tankers while bargaining hard about terms. On June 11, industry sources said Japanese insurers were expanding their maritime coverage to allow more domestic tankers to transport Iranian crude and that Iranian shipments to China were flowing. At least 4 million barrels of Iranian oil from the July program are on their way to Chinese refiners, said a Chinese crude trader. “Looks like the freight negotiations are not a package, but voyage by voyage,” said the trader, who declined to be identified due to the sensitive nature of the matter.

In Europe, Turkey remain the only large customer but it has also slashed imports drastically.