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China Defies Trump, Rejects US Request To Halt Iran Crude Imports
by Tyler Durden
Fri, 08/03/2018
Though no shocker as we predicted previously, China has refused to cut Iranian oil imports at the United States' request in a severe blow to White House efforts to intensify pressure and economically isolate the Islamic Republic after the US withdrawal from the 2015 nuclear deal. However, Beijing has reportedly agreed not to accelerate purchases.
China, itself a target of ratcheting US economic pressure especially after Wednesday's shock news that President Trump may impose a 25 percent tariff on $200 billion worth of Chinese goods, remains the world's top crude importer and is Iran's top buyer.
Bloomberg reported overnight, citing two officials familiar with the negotiations, that limited concessions have been made, however:
Beijing has, however, agreed not to ramp up purchases of Iranian crude, according to the officials, who asked not to be identified because discussions with China and other countries continue. That would ease concerns that China would work to undermine U.S. efforts to isolate the Islamic Republic by purchasing excess oil.
China has long been on record as opposing unilateral sanctions and further according to Bloomberg accounted for 35 percent of Iranian exports last month, based on ship tracking data.
Meanwhile Iran's foreign minister welcomed the news: “The role of China in the implementation of JCPOA, in achieving JCPOA, and now in sustaining JCPOA, will be pivotal,” Mohammad Javad Zarif said, according to Reuters.
The Trump White House currently has teams of negotiators around the world pressuring European and other capitals to cut off trade with Iran — largely unsuccessful to date — in an attempt to cut its oil exports to zero by November 4.
This has been accompanied by the threat of sanctions for those who don't comply with US demands to show "significant" progress in reducing Iranian oil purchases. Bloomberg reports that a US team led by Francis Fannon, the assistant secretary of state for the Bureau of Energy Resources, recently visited China to discuss sanctions, confirmed by a State Department spokesman.
Crucially, it is as yet unclear how severe a toll this will take on the global oil market, as Bloomberg discusses the variables and unknowns at play:
The oil market has been speculating about how much of Iran’s exports could be eroded by the U.S. sanctions, with analysts from BMI Research to Mizuho Securities predicting that China might boost its imports of cheap supplies from the state and offset cuts by other nations. Countries including South Korea and Japan are reducing purchases from OPEC’s third-largest producer before the deadline to avoid the risk of buyers losing access to the U.S. financial system.
...The Organization of Petroleum Exporting Countries, led by Saudi Arabia, has pledged to fill any supply gaps in the market after Trump’s complaints. That’s helped limit a rally in global benchmark Brent crude, which is trading near $73 a barrel after falling 6.5 percent last month. The London marker is still up about 40 percent from a year earlier.
Saudi Arabia, for geopolitical reasons, remains a close American oil partner in lobbying for global isolation of Iran at a moment when Iran's military has threatened to block all regional exports from the Persian Gulf, initiating war games this week near the vital Straight of Hormuz, prompting the Pentagon to deploy additional US warships to the area.
Meanwhile, Commerce Secretary Wilbur Ross told Fox Business Network on Thursday that there's more pain ahead for Beijing while also attempting to calm fears of potential blowback on US consumers and businesses, assuring the public, "It’s not something that’s going to be cataclysmic".
“We have to create a situation where it’s more painful for them to continue their bad practices than it is to reform,” Ross said of ratcheting up the pressure on China and in defense of the president's escalatory rhetoric on tariffs.
“The reason for the tariffs to begin with was to try and convince the Chinese to modify their behavior. Instead they have been retaliating. So the president now feels that it’s potentially time to put more pressure on, in order to modify their behavior,” he said.
Ross tried to calm fears further by saying Wednesday's announcement of potentially raising planned tariff's on $200 billion of Chinese imports from 10 percent to 25 percent would only amount to $50 billion — according to him a negligible fraction of the Chinese economy.
But the Chinese aren't seeing it that way, as on Thursday Chinese Foreign Minister Wang Yi slammed talk of possible 25 percent tariffs: "Instead of achieving one's own goal by doing this, we believe it will only hurt one's own interests," he told reporters at a press conference in Singapore. He continued, "Sixty per cent of Chinese exports to the US are actually made by foreign companies, including American firms in China. Is the US trying to put tariffs on its own companies?"
"For Chinese exports to the US, many of them are no longer produced in the US itself. Is the US administration trying to raise the living cost of its own consumers?" the Chinese FM said.
FM Wan Yi called for cooler heads to prevail: "While China is ready to talk to anyone ready to talk to us, including the US, this kind of dialogue has to take place on the basis of mutual respect and equality," he concluded.
* * *
While as much as 2.3 million barrels a day of crude from the Persian Gulf state at risk per Trump's sanctions, the White House has has now as predicted gotten the door slammed by China, while India or Turkey have already hinted they would defy Trump and keep importing Iranian oil. Together three three nations make up about 60 percent of the Persian Gulf state’s exports.
While next steps remain unclear, the potential outcome for the US isn't: should China fully pivot away from US exports and replace them with Iranian product, the US trade deficit will resume rising, further adding to the pressure of what is Trump's biggest economic hurdle: the double US deficits.
The flipside is that since less Iranian oil exports will go unused, it may provide a solace to the US consumer facing the highest gas prices in four years. However, if the ongoing pipeline bottleneck in the Permian is not resolved soon, said solace will prove to be short-lived.
***
https://www.zerohedge.com/news/2018...alt-iran-crude-imports-more-tariff-pain-ahead
US regime must do something to save face.
by Tyler Durden
Fri, 08/03/2018
Though no shocker as we predicted previously, China has refused to cut Iranian oil imports at the United States' request in a severe blow to White House efforts to intensify pressure and economically isolate the Islamic Republic after the US withdrawal from the 2015 nuclear deal. However, Beijing has reportedly agreed not to accelerate purchases.
China, itself a target of ratcheting US economic pressure especially after Wednesday's shock news that President Trump may impose a 25 percent tariff on $200 billion worth of Chinese goods, remains the world's top crude importer and is Iran's top buyer.
Bloomberg reported overnight, citing two officials familiar with the negotiations, that limited concessions have been made, however:
Beijing has, however, agreed not to ramp up purchases of Iranian crude, according to the officials, who asked not to be identified because discussions with China and other countries continue. That would ease concerns that China would work to undermine U.S. efforts to isolate the Islamic Republic by purchasing excess oil.
China has long been on record as opposing unilateral sanctions and further according to Bloomberg accounted for 35 percent of Iranian exports last month, based on ship tracking data.
Meanwhile Iran's foreign minister welcomed the news: “The role of China in the implementation of JCPOA, in achieving JCPOA, and now in sustaining JCPOA, will be pivotal,” Mohammad Javad Zarif said, according to Reuters.
The Trump White House currently has teams of negotiators around the world pressuring European and other capitals to cut off trade with Iran — largely unsuccessful to date — in an attempt to cut its oil exports to zero by November 4.
This has been accompanied by the threat of sanctions for those who don't comply with US demands to show "significant" progress in reducing Iranian oil purchases. Bloomberg reports that a US team led by Francis Fannon, the assistant secretary of state for the Bureau of Energy Resources, recently visited China to discuss sanctions, confirmed by a State Department spokesman.
Crucially, it is as yet unclear how severe a toll this will take on the global oil market, as Bloomberg discusses the variables and unknowns at play:
The oil market has been speculating about how much of Iran’s exports could be eroded by the U.S. sanctions, with analysts from BMI Research to Mizuho Securities predicting that China might boost its imports of cheap supplies from the state and offset cuts by other nations. Countries including South Korea and Japan are reducing purchases from OPEC’s third-largest producer before the deadline to avoid the risk of buyers losing access to the U.S. financial system.
...The Organization of Petroleum Exporting Countries, led by Saudi Arabia, has pledged to fill any supply gaps in the market after Trump’s complaints. That’s helped limit a rally in global benchmark Brent crude, which is trading near $73 a barrel after falling 6.5 percent last month. The London marker is still up about 40 percent from a year earlier.
Saudi Arabia, for geopolitical reasons, remains a close American oil partner in lobbying for global isolation of Iran at a moment when Iran's military has threatened to block all regional exports from the Persian Gulf, initiating war games this week near the vital Straight of Hormuz, prompting the Pentagon to deploy additional US warships to the area.
Meanwhile, Commerce Secretary Wilbur Ross told Fox Business Network on Thursday that there's more pain ahead for Beijing while also attempting to calm fears of potential blowback on US consumers and businesses, assuring the public, "It’s not something that’s going to be cataclysmic".
“We have to create a situation where it’s more painful for them to continue their bad practices than it is to reform,” Ross said of ratcheting up the pressure on China and in defense of the president's escalatory rhetoric on tariffs.
“The reason for the tariffs to begin with was to try and convince the Chinese to modify their behavior. Instead they have been retaliating. So the president now feels that it’s potentially time to put more pressure on, in order to modify their behavior,” he said.
Ross tried to calm fears further by saying Wednesday's announcement of potentially raising planned tariff's on $200 billion of Chinese imports from 10 percent to 25 percent would only amount to $50 billion — according to him a negligible fraction of the Chinese economy.
But the Chinese aren't seeing it that way, as on Thursday Chinese Foreign Minister Wang Yi slammed talk of possible 25 percent tariffs: "Instead of achieving one's own goal by doing this, we believe it will only hurt one's own interests," he told reporters at a press conference in Singapore. He continued, "Sixty per cent of Chinese exports to the US are actually made by foreign companies, including American firms in China. Is the US trying to put tariffs on its own companies?"
"For Chinese exports to the US, many of them are no longer produced in the US itself. Is the US administration trying to raise the living cost of its own consumers?" the Chinese FM said.
FM Wan Yi called for cooler heads to prevail: "While China is ready to talk to anyone ready to talk to us, including the US, this kind of dialogue has to take place on the basis of mutual respect and equality," he concluded.
* * *
While as much as 2.3 million barrels a day of crude from the Persian Gulf state at risk per Trump's sanctions, the White House has has now as predicted gotten the door slammed by China, while India or Turkey have already hinted they would defy Trump and keep importing Iranian oil. Together three three nations make up about 60 percent of the Persian Gulf state’s exports.
While next steps remain unclear, the potential outcome for the US isn't: should China fully pivot away from US exports and replace them with Iranian product, the US trade deficit will resume rising, further adding to the pressure of what is Trump's biggest economic hurdle: the double US deficits.
The flipside is that since less Iranian oil exports will go unused, it may provide a solace to the US consumer facing the highest gas prices in four years. However, if the ongoing pipeline bottleneck in the Permian is not resolved soon, said solace will prove to be short-lived.
***
https://www.zerohedge.com/news/2018...alt-iran-crude-imports-more-tariff-pain-ahead
US regime must do something to save face.
