BEIJING—China is forging ahead with long-term efforts to reduce a reliance on its traditional oil suppliers, including Iran, even as it publicly brushes aside U.S. and European pressure to cut its Iranian imports.
Premier Wen Jiabao on Thursday wrapped up a trip to the Persian Gulf, where he inked billions of dollars in deals with key U.S. allies including Saudi Arabia, the United Arab Emirates and Qatar. Though Mr. Wen didn’t visit Iran, his trip came as China faces questions over its apparent support for Tehran.
Mr. Wen defended Beijing’s deep-seated energy ties with Iran on Wednesday but said China opposed its nuclear-weapons program, which some countries including Saudi Arabia view as an imminent threat to regional security. “We are deeply concerned about the situation in the Persian Gulf and the Middle East,” he said during a news conference in Doha.
In his first-quarter letter to investors of Greenlight Capital, David Einhorn lashed out at regulators. He claimed that the market is "fractured and possibly in the process of breaking completely." Q1 2021 hedge fund letters, conferences and more Einhorn claimed that many market participants and policymakers have effectively succeeded in "defunding the regulators." He pointed Read More
China’s deepening ties with U.S.-friendly countries in the Middle East parallel broader efforts to diversify its sources of foreign oil. Smaller exporters in the Middle East and emerging suppliers in Africa and Latin America are making up increasingly sizable shares of China’s total crude imports.
Additionally, the overall share of China’s top three suppliers—Saudi Arabia, Angola and Iran—has dropped slowly but steadily since 2009, according to China customs data, even as overall crude imports surged roughly 14% between 2009 and November 2011, the latest data available. Imports from Venezuela doubled during the same period, while crude imports from Kazakhstan, Iraq and the UAE grew rapidly as well.
China’s diversification program has a long way to go, and Iran still supplies roughly 11% of its oil imports. Any move by China to significantly curtail Iran imports could drive up global prices as Beijing seeks sources elsewhere.
The diversification drive has gained greater urgency amid disruptions among China’s smaller crude suppliers, including Libya and Sudan, and growing concern in Beijing that unrest of the Arab Spring could spread.
Tehran has threatened to blockade the Strait of Hormuz, a critical oil-transit channel, in response to the U.S.-led sanctions. Meanwhile, Sudan and South Sudan have been locked in an oil-transit dispute, which threatens to cause major disruptions in its China shipments. Sudan supplied 5% of China’s oil imports in the first 11 months of last year.
“China is making good progress toward diversifying its oil supply,” said Gordon Kwan, a Hong Kong-based energy analyst at Mirae Asset Securities. “If they were to concentrate on just one or two countries that just accidentally went out of production, [global] oil prices could easily double.”