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U.S. officials say China is reducing purchases of Iranian oil

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WASHINGTON -- China has fallen in line with Western efforts to cut back purchases of Iranian oil and will be spared economic punishment threatened under a new round of U.S. sanctions, Obama administration officials said this week.

The cutbacks are being imposed in an effort to force Iran to agree to limits on its nuclear program, which many nations fear is aimed at developing a nuclear bomb.

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Most countries that have been major buyers of Iranian crude began reducing their purchases in recent months, and 18 of them were granted exemptions from U.S. sanctions earlier in June.

China, the largest purchaser of Iranian crude in 2011, was conspicuously absent from the list. Industry officials said there were signals that China might be hoping to snap up the unpurchased oil at discounted prices to power its vast manufacturing sector.

But China has been shifting to other sources of petroleum since the beginning of the year. On Wednesday, a Chinese government website announced that Beijing had cut back its purchases of Iranian oil by 25% so far this year and intended to maintain the reductions through the end of the year, U.S. officials noted in a media teleconference on Thursday.

Secretary of State Hillary Rodham Clinton said in a statement she had determined that both China and Singapore have now ‘significantly reduced’ their purchases and now qualify for waivers for the next 180 days.

Absent the waivers, the U.S. might have been obliged under a 2011 law to punish China for additional purchases by taking steps to cut it off from the U.S. financial system. Such a move could have led to a major disruption of the U.S.-China relationship, which has already been under strain in connection with disputes over the American military presence in East Asia, accusations of human rights abuses in China and other issues.

Mark Dubowitz, an energy specialist at Foundation for Defense of Democracies, said some industry officials believe that a few Chinese companies are still trying to quietly purchase Iranian oil, which is moving covertly in tankers. But he said the administration has decided ‘they would be better off trying to work this out quietly with China.’

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The new U.S. sanctions came fully into force on Thursday. On Sunday, the European Union is set to impose a blanket ban on purchases of Iranian oil by its member states and a ban on the sale of the insurance needed to underwrite tankers carrying Iranian oil.

U.S. officials noted that exports of Iranian oil fell from 2.5 million barrels a day last year to 1.5 million barrels per day for the first months of 2012, according to the International Energy Agency.

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-- Paul Richter

April 15, 2008. Credit: Vahid Salemi / Associated Press

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