China's Sinopec Halves Iran Oil Loadings

China’s Sinopec Corp is halving loadings of crude oil from Iran this month, as the state refiner comes under intense pressure from Washington to comply with a US ban on Iranian oil from November, said people with knowledge of the matter.

The sources did not specify volumes, but based on the prevailing supply contract between the top Chinese refiner and the National Iranian Oil Company, its loadings would be reduced to about 130,000 barrels per day, Reuters reported.

It would be 20% of China’s average daily imports from Iran in 2017, dealing a blow to Tehran, which has counted its top oil client to maintain imports while European and other Asian buyers wind down purchases to avoid US sanctions.

The cut marks Sinopec’s deepest reduction in years as the Hong Kong and New York-listed state oil company faces direct pressure from a US administration determined to choke off the flow of petrodollars to Iran.

According to one of the sources, the move comes after senior US officials visited the refiner in Beijing last month, demanding steep cutbacks in Iranian oil purchases.

“This round is completely different from last time. Then it was more of a consultative tone, but this time it is almost like an ultimatum,” said the source.

The sources declined to be identified due to the sensitive nature of the matter. Sinopec declined to comment. NIOC did not respond a Reuters email seeking comment.

Further complicating the matter, Iran is having difficulty securing insurance for its oil vessels, said shipping and insurance sources, as most European and US-based re-insurance firms are winding down their Iranian business.

Chinese buyers, including Sinopec and state-run trader Zhuhai Zhenrong Corp, have since July shifted their cargoes to vessels owned by National Iranian Tanker Company to keep supplies flowing amid the reinstatement of economic sanctions by the US.

During the last round of United Nations sanctions around 2011, officials from Washington asked Chinese firms to curb investments in Iranian oil and gas fields, but stopped short of demanding a full stop to oil shipments.

Caption: Chinese buyers, including Sinopec and state-run trader Zhuhai Zhenrong Corp, have since July shifted their cargoes to vessels owned by National Iranian Tanker Company.