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Iran’s expanding oil trade
FROM PAGE B4
Except for two cargoes in December 2021 and January 2022, China’s customs has not recorded any direct imports from Iran since December 2020.
Almost all Iranian oil entering China is branded as originating from Malaysia or other Middle Eastern countries.
The oil is carried by a “dark fleet” of older tankers that typically switch off their transponders when loading at Iranian ports to avoid detection.
Other tactics used by such ships include faking locations and conducting ship-to-ship (STS) operations at locations outside of authorised transfer zones and sometimes in poor weather to conceal activities, raising fears among nations over potential pollution.
These ships sometimes become traceable via satellites near ports in Oman, the UAE and most prominently Malaysia, a top trans-shipment hub, before discharging cargoes mostly at ports in China’s Shandong province, according to Vortexa and Kpler.
China regulates crude oil imports by issuing quotas. Earlier this year when quotas were tight, traders labelled a few Iranian heavy crude shipments as bitumen mix, prompting Chinese authorities to step up tanker inspections.
Giant state refiners Sinopec and PetroChina were once key Iranian oil clients, with investments in oilfields in the country. But they have stopped lifting Iranian oil since late 2019, after then-US President Donald Trump re-imposed sanctions on Tehran’s petroleum exports.
The sanctions initially led to a sharp drop in flows to China, but volumes have rebounded as more independent refiners joined the purchases.
Most of the more than 40 independent Chinese refiners, known as teapots, process Iranian oil, according to Chinese traders. Teapots have little exposure to the dollar-based global financial system and don’t need to cooperate with western firms on technology. Most of the transactions are believed to be paid in Chinese currency.
Mainly because the oil is cheap and of good quality.
Iranian Light, the main export grade, trades at a discount of about $13 a barrel to ICE Brent on a deliver-ex-ship basis in Shandong for December arrival. That compares with a premium of about $5 a barrel for similar-quality Oman crude.
China also buys crude from Russia and Venezuela - which have also faced US sanctions. Beijing has long opposed unilateral sanctions and has said its normal trade deserves respect and protection.
However, China’s last Iranian oil cargo officially recorded by customs was in early 2022, destined for state reserves.
Since 2021, Washington has sanctioned over 180 individuals and entities related to Iran’s petroleum and petrochemical sectors or related to moving and laundering illicit proceeds.
Over 40 vessels have been identified as blocked property of the sanctioned entities.
The US government also regularly engages with other countries to strongly discourage them from taking steps that contravene sanctions on Iran, the State Department told Reuters in October.

Dollar dips
REUTERS, New York
The dollar dipped against the euro on Friday but gained against the yen as investors evaluated comments by Federal Reserve Chair Jerome Powell that the central bank could hike rates again if inflation remains above its target.
The Japanese currency also remained on watch for possible intervention as it holds near a one-year low against the greenback.
Powell and other Fed officials said on Thursday that they are still not sure that interest rates are high enough to finish the battle with inflation, with Powell saying that the Fed may get further help in taming price increases from improvements in the supply of goods, services and labour.
Markets are looking for “the ray of sunshine” that the Fed is done hiking rates, even though Powell since Jackson Hole has been clear that it will depend on data as it comes in, said Lou Brien, market strategist at DRW Trading in Chicago.
“Yesterday was another one of those occasions where Powell reminded that we have to take care of inflation, we don’t know that we’ve done enough yet - we will know as the data unfolds but we might have to do more if the data doesn’t unfold as we anticipate,” he said.
Consumer price inflation and retail sales data due next week are expected to offer the next clues on whether further rate increases are likely.
The dollar briefly gained on Friday after a survey showed that US consumer sentiment fell for a fourth straight month in November, and households’ expectations for inflation rose again, with their medium-term outlook for price pressures shooting to the highest in more than a dozen years.
The dollar index was last down 0.06 percent on the day at 105.85.
The dollar tumbled last week after Powell was interpreted as striking a dovish tone after the Fed’s two-day meeting, with softer-then-expected jobs data on Friday adding to a belief that the Fed has finished hiking interest rates.
Fed funds futures traders are pricing in a 22 percent chance of an additional hike by January, according to the CME Group’s FedWatch Tool.
Some analysts, however, see the market as too complacent about the risk that the Fed is not yet done.
“Markets continue to underestimate the persistence of inflation globally and that in turn leads them to underestimate the likelihood of further monetary tightening. Right now, market pricing is leaning heavily to rate cuts by mid-2024 and we suspect this will have to be rethought in the coming weeks,” Win Thin, global head of currency strategy at Brown Brothers Harriman said in a note on Friday.
Fed Bank of San Francisco President Mary Daly said on Friday she is not ready to say yet whether the central bank is done raising its interest rate target to get inflation back to 2 percent.
The dollar also spiked on Thursday in line with Treasury yields after the US Treasury Department saw weak demand for a $24 billion 30-year bond auction.
It was not clear whether demand for the debt was impacted by a ransomware attack on the Industrial and Commercial Bank of China’s (ICBC) US arm, which has disrupted some trades in the US Treasury market.
The euro gained 0.10 percent to $1.0679.
European Central Bank interest rates kept at a record high for long enough could return inflation to the bank’s 2 percent target, ECB President Christine Lagarde said on Friday.
Against the Japanese yen, the dollar gained 0.16 percent to 151.59 yen, the highest since November 1. Traders remained on alert for potential intervention in the Japanese currency, which is near a one-year low of 151.74 reached last week. The yen is on track for its worst week since August, with the dollar gaining 1.48 percent against the currency this week.
The euro also hit a 15-year high of 161.95 yen on Friday.
The Norwegian crown jumped after data showed Norway’s inflation was stronger than expected in October, boosting market rate hike expectations.
The dollar was last down 0.94 percent at 11.13 crowns to the dollar.
The Australian dollar fell to $0.63395, the lowest since November 1. It has tumbled since the Reserve Bank of Australia on Tuesday raised interest rates to a 12-year high but played down the probability of further increases.
Bitcoin, the world’s largest cryptocurrency, was at $37,167, having peaked at $37,978 in the previous session, its highest level since May 2022.
Prices of the digital assets have surged after speculation of an imminent approval of BlackRock’s spot bitcoin ETF.
A spot crypto ETF would make the sector “more accessible for institutional investors to enter the crypto space, likely boosting demand and subsequently prices,” said Carl Szantyr, managing partner of digital asset hedge fund Blockstone Capital.