China has hit out at the Trump administration’s decision to refuse any more sanctions waivers to countries that continue to buy Iranian oil.

The US intends to apply sanctions to nations that do not end their imports of Iranian oil from early May. Beijing has said this policy will intensify turmoil in the Middle East and in the international energy market.

"China firmly opposes the US implementation of unilateral sanctions and its so-called long-armed jurisdiction," Chinese Foreign Ministry spokesman Geng Shuang said on April 23.

Largest purchaser of Iranian oil China, second largest India, Iran’s neighbour Turkey, Japan and South Korea have continued to import volumes of Iranian oil without fear of penalty from Washington thanks to temporary waivers handed out by the US last November. But they are due to expire within days and the US, intent on bringing Iran’s oil exports down to zero as soon as possible to strangle the country’s economy in a bid to force changes in Tehran’s Middle East policy, has said they will not be extended.

Turkey, China vociferous
Like Turkey, China has been vociferous in opposing the US move, while India appears to be mulling its options and Japan has said it expects only a small impact from the ban on Iranian oil asked for by the US. South Korea has little room for manoeuvre given its reliance on US backing in its unresolved difficulties with North Korea.

In March, exports of Iranian oil to China officially reached 1.7mn tonnes, compared to February’s 866,000 tonnes, indicating the country has been preparing for the US decision on waivers. The data was issued by China’s General Administration of Customs.

In 2018, China imported some 29.27mn tonnes, or 585,400 b/d, of Iranian oil. That corresponded to roughly 6% of China’s total oil imports last year.

Chinese oil companies including Sinopec and CNPC both have operations in Iran, having spent billions of dollars on southern oil fields including North Azadegan and Yadavaran in cooperation with Iranian enterprises.

There is the possibility that China might make its approach to Iranian oil shipments a bargaining chip in its ongoing talks with the US over how to avoid a full-blown trade war between Beijing and Washington. It is suspected the Chinese have already pulled back from some investments in Iran on such a basis.

The US has said it is working with Saudi Arabia and the United Arab Emirates, two of the largest oil exporters, to ensure the market was "adequately supplied" after the drive for a complete wipeout of Iranian oil shipments kicks in.

Iran working “with all our might” to break sanctions
Iranian Oil Minister Bijan Zangeneh said on April 23 that the US will fail in cutting Iran’s oil exports to nil. He told parliament that Iran would work "with all our might... toward breaking America's sanctions."

A spokesman for Iran's Foreign Ministry dismissed the US waivers stance on April 22, calling the sanctions "illegal" and adding that Tehran "did not and does not attach any value or credibility to the waivers.”

The European Union said on April 23 it "regrets" the US decision. It added that the move would further undermine the 2015 nuclear deal between six major powers and Iran that granted Tehran sanctions relief in exchange for restrictions on its nuclear programme.

The EU’s policy was to "continue to abide by [the nuclear deal] as long as Iran continues with full and effective implementation", EU foreign policy spokeswoman Maja Kocijancic said. Brussels does not believe any evidence has been presented to show that Tehran is not in compliance with the accord.

In further comments to parliament, Zangeneh said that “America has made a bad mistake by politicising oil and using it as a weapon in the fragile state of the market.”

He observed that the oil market is unpredictable, IRNA reported.

“You can’t be assured that enough oil can be produced to meet demand because some regional countries announce production capacities higher than their real levels,” Zangeneh added.

Iran’s best hope US middle class?
Perhaps Iran’s best hope that Trump’s ‘no waivers’ policy will backfire lies with American middle class consumers. Higher gasoline prices are accounting for a substantial part of the faster wage growth they are currently starting to enjoy and gasoline pump prices could head a good deal higher if other oil suppliers cannot cover for lost Iranian market volumes.

Pump prices in the US have already jumped about 25% this year, the fastest rate in three years, Reuters reported on April 23. Crude oil prices, meanwhile, have hit their highest in about six months.

Some analysts expect the national average pump price, currently near $2.85 a gallon, will climb above $3 a gallon for the first time since 2014. Few goods prices aggravate US consumers as much as high gasoline prices.

“It’s an important part of consumers’ psyche,” Mark Zandi, chief economist at Moody’s Analytics, was reported as saying of energy price movements. “They live with it every day.”