A China-flagged crude-oil tanker stopped over at Iran's main oil export facility last month and is now headed back to East Asia, fueling speculation that China may be deploying its own vessels to ferry Iranian crude to meet growing domestic needs.
The U.S. and the European Union have imposed financial and trade sanctions on Iran as part of efforts to prevent the country from expanding production of nuclear fuel, which they say may be used to develop nuclear weapons.

The EU sanctions in particular have cut off much of the available insurance coverage available to operators of tankers carrying Iranian oil, forcing importing countries to either provide alternative insurance, as in the case of Japan, or use Iran-flagged tankers, as China has done until now.

The tanker Yuan Yang Hu, owned by state-controlled shipping conglomerate China Ocean Shipping (Group) Co., stopped at Iran's Kharg Island on March 21 for less than a day, according to shipping records from U.S.-based consulting firm IHS. The stopover implies that China has found a way around the insurance sanctions.

"If China can carry this out with no immediate repercussions from Europe and the U.S., it may potentially raise [China's] Iranian crude imports back to their historic average," Sijin Cheng,�Barclays�analyst, said by telephone Wednesday, stressing that the available information is too sketchy to adequately gauge the development.

Iran is China's No. 4 supplier of crude oil after Saudi Arabia, Angola, and Russia. Last year's imports fell 21% compared with 2011, when Iran was China's No. 3 supplier.

In February, China imported about 2 million tons of crude oil from Iran, up 74.4% on year.

The Yuan Yang Hu has a deadweight capacity of 297,305 tons, China Ocean Shipping's website shows. The company couldn't be reached for comment Thursday.

Oslo-based marine insurance provider Skuld lists the Yuan Yang Hu as one of the vessels registered with it for protection and indemnity insurance.

When contacted for comment, a spokesman for Skuld said in an email, "We insure ships on a yearly basis and do not usually know what particular activity a ship is engaged in at any one time. In general we only become aware of a particular ship's location and cargo if there is an incident giving rise to a claim."

Shipowners aren't "obliged to inform Skuld about the trade" being conducted with the vessel, the spokesman said. However, insurance coverage is automatically excluded "if providing cover or paying a claim may expose Skuld to the risk of sanctions," he added.

The tanker's charterer, cargo size and final port of call couldn't be determined.

By The Wall Street Journal

 

The Iran Project is not responsible for the content of quoted articles.