BOSTON—China has sharply reduced its oil imports from Iran as analysts look for signs of a shift in Beijing's nuclear sanctions policy.
In the first two months of the year, China's imports from Iran plunged 37 percent from a year earlier at a time when its total oil imports soared over 45 percent, according to General Administration of Customs reports.
The sudden dip has dropped Iran to fifth place among China's largest oil suppliers in February from third on the list last year.
Experts are unsure whether China may be signaling a change in its resistance to new U.N. sanctions against Iran's nuclear program or whether it is reducing reliance on Iranian oil in case of a confrontation.
"Is there a message that they're trying to get across to Iran?" said Robert Ebel, senior adviser to the energy and national security program at the Center for Strategic and International Studies in Washington.
Ebel said contract or cargo problems can throw imports off track temporarily, but such a steep cutback from Iran is notable when China's oil demand has risen to over 8 million barrels per day.
"To have it drop for two months in a row is a bit unusual," Ebel told Radio Free Asia.
Losses offset elsewhere
In the first two months, China imported about 315,000 barrels per day of Iranian oil, down from an average of nearly 465,000 last year.
The losses have been more than offset by big increases from Saudi Arabia, Angola, Russia, Oman, and Iraq.
China's reliance on Iranian oil for 11 percent of its imports last year is frequently cited as a reason for its resistance to new sanctions on Tehran's suspected nuclear weapons development.
Following Russian President Dmitry Medvedev's statement in March that the sanctions scenario "cannot be excluded," China is increasingly seen as the lone holdout among permanent members of the U.N. Security Council.
On March 30, U.S. President Barack Obama said he wants to see a new sanctions regime "in place in weeks."
Iran blames U.S.
While China has not explained its shift in oil sourcing, the changed pattern seems to show that it can replace Iranian supplies in case of an interruption.
"I think other countries in the Middle East would be happy to take Iran's place if that ever happened," Ebel said.
Some Iranian officials have blamed the United States for the drop in Chinese buying, Platts Commodity News reported on April 6, citing Iran's ISNA news agency.
"Americans, since the time of [President George W.] Bush have been seeking to convince ... China to buy oil from other countries instead of Iran," said Seyyed Hamid Hosseini, head of the Iranian Oil Products Exporters' Union.
"The decrease is definite. The Chinese used to buy 400,000 barrels per day of crude oil from us. This has decreased to 200,000 barrels per day," he said, suggesting imports have fallen even more since the February report.
Japan imports drop
Philip Andrews-Speed, a China energy expert at Scotland's University of Dundee in Edinburgh, said the reasons for the sourcing shift are unclear, but he noted reports that Japan's oil imports from Iran are also dropping.
On March 30, Reuters reported that Japanese imports from Iran may fall to their lowest level in 17 years. Industry sources cited a combination of technical, cost, and political concerns with Iranian crude, the report said.
While pressure is rising for a new round of sanctions, there have been no suggestions of an embargo on Iranian oil exports. Efforts to block gasoline exports to fuel-hungry Iran have also reportedly been put aside due to resistance from both Russia and China.
But China's concerns over sanctions pressure appears to be increasing as its dependence on foreign oil grows. Andrews-Speed said the issue for China may be the higher cost of oil rather than availability.
"Its imports are rising, so it will buy oil wherever it can and wherever it chooses," he said. "It's relatively easy for China to buy from other countries if it will pay whatever the price that's required."
With global economic recovery under way, oil prices are already on the upswing.
"The question is, are we just going to see a steady rise from $85 per barrel, or if something does happen in Iran ... do we see a much more sudden and dramatic rise," said Andrews-Speed.
