China buys more Iranian and Venezuelan oil in a test for Biden

This trend is confirmed by other navigation trackers, some of which see these sales at 1 million barrels per day.

“If it sells 1 million barrels a day at current prices, Iran has no incentive to negotiate,” said Sara Vakhshouri, president of Washington-based SVB Energy International and an expert on the Iranian oil industry.

President Biden’s administration sought to engage with Iran to return to a 2015 nuclear deal that was ended by its predecessor, former President Donald Trump. But Tehran has so far rejected the openings.

Venezuela’s oil purchases from China, where the U.S. has tried to use sanctions to pressure the Maduro regime to hold credible democratic elections, are also growing, according to London financial data provider Refinitiv.

The growing oil shipments to China, Iranian and Venezuelan officials said, followed Biden’s offer of relief to Iran in exchange for compliance with an international nuclear deal by the country and to Venezuela if it organized free elections. Mr. Trump followed a policy of escalating sanctions pressure against the two countries.

China is also increasingly flouting international sanctions against North Korea and is no longer trying to hide part of its smuggling activity while seeking to help Pyongyang, American officials said recently.

Combined with rising oil prices, the events eased the pressure for Tehran and Caracas to negotiate with Washington, these people said.

“Chinese informal purchases have reduced the need to negotiate oil sanctions” for Tehran, said an American official with a focus on Iran.

The State Department, questioned about the effects of Chinese imports of Iranian oil on efforts to win back Tehran, did not respond to a request for comment. State Department spokesman Ned Price rejected the idea that the Biden government would ease Tehran’s non-action sanctions to curb violations of the nuclear deal, known as the Joint Comprehensive Action Plan, or JCPOA.

“If the Iranians are under the impression that there is no movement on their part to resume full compliance with the JCPOA that we will offer favors or unilateral gestures, this is a mistaken impression,” Price told reporters earlier this week.

Since November, Iranian oil traders say they have been sought out for new sales by Asian buyers looking to take advantage of discounted prices because buyers feel the pressure of sanctions will ease under the Biden government.

Iranian authorities and traders are increasingly adept at avoiding sanctions, making secret transfers in the Persian Gulf and South Asia to hide the origin of their cargo and finding new ways to receive payment using non-bank platforms such as cryptocurrencies.

On Monday, Iran’s first vice president, Eshaq Jahangiri, said Iran’s oil exports had increased in recent months, although he did not give details.

“There were some problems with money transfers. Therefore, we had to come up with certain plans, methods for generating oil export earnings, and recently we have made progress, ”said Jahangiri, according to the state news agency IRNA.

Kpler analyst Homayoun Falakshahi said the ship tracking showed that the fastest growing buyer is state-owned China Petroleum & Chemical Corp.

, or Sinopec, the largest refiner in the country. After cutting staff and spending over the past two years, Sinopec is posting new job offers online and talking to the government about doubling its production in the country, according to former Iranian oil authorities and a consultant to the company.

Officials at Sinopec and the Chinese embassy in Washington did not return requests for comment. Chinese officials have long criticized US policy in Iran and Venezuela, as well as their financial diplomacy, as unilateral and coercive.

Washington still hopes to attract the Islamic Republic with the most substantial relief that would come with the release of billions of dollars in frozen oil money and a return to official oil sales. In return, the United States wants Iran to stick to the nuclear deal despite repeated violations and wants to tighten controls over Tehran’s ballistic program and other efforts that were not covered by the original nuclear deal.

Meanwhile, Iran has helped Venezuela by supplying oil products, selling diesel and other critical energy needs in exchange for gold and Venezuelan oil. This oil is then sold on global markets, generating revenue for Iran and strengthening Maduro politically.

For the US-China relationship, already strained by a series of economic and security disputes, Beijing’s crude trade with two of Washington’s main enemies adds another major irritant.

“This is a complex relationship and perhaps the most consequential relationship for both of our countries, and it has adversary aspects, it has competitive aspects and it has cooperative aspects,” said Secretary of State Antony Blinken earlier this week.

American officials have reminded China that companies that help import oil from Iran are at risk of sanctions and say Beijing could be punished for its trade with Venezuela. The State Department declined to comment on its communications with China.

“The Maduro regime has adapted to oil sanctions, finding a way around them to deliver oil to China and Russia, and Iran has helped them,” said a senior government official. “So we are going to use our sanctioning tools to make sure that we are eliminating those options” for the Maduro government, the official said.

Others, however, say the government will also be careful to balance these policies with American economic interests. “In some cases, we do not sanction [China] because of the impact on our economy. If we hit hard, they can retaliate, ”said another US official.

Biden government officials are meeting with Chinese colleagues for the first time this week in Alaska.

Write to Benoit Faucon at [email protected] and Ian Talley at [email protected]