CNN Money reported that China, now the world's largest buyer of Iranian oil is also the only nation still threatened with US sanctions because of its purchases of Iranian crude.
Analysts said that if the United States doesn't grant China a waiver, any Chinese entity that still buys oil from Iran could be banned from doing business in the United States. But the Mr Obama administration will likely grant the country a waiver rather than risk a trade war.
Mr Robert McNally head of the Rapidan Group, an energy consultancy said that "We're unlikely to sanction China. We're not going to pick a trade war."
The United States and China have arguably the world's most important economic relationship. The United States imports vast amounts of cheap consumer good from China, and China relies on the US market to sell those exports. A trade war would put that at risk.
According to the Rhodium Group, currently China's energy demands continue to increase along with its oil imports. China currently imports about 400,000 barrels of oil a day from Iran which charts Iran's oil exports.
The Chinese have publicly called the US sanctions illegal as they lack United Nations backing and have declared they have no intention of complying with them. So far, 18 countries have sufficiently reduced their imports of oil from Iran to be exempted from US sanctions set to kick in June 28th 2012.
The US sanctions would prohibit any bank, government, corporation or other entity that buys or helps finance a transaction involving Iranian crude oil from doing businesses in the United States. What's really going on behind closed doors between the US and China is a bit of a mystery.
The Untied States has been planning on exempting the Chinese all along based on the big reductions the Chinese have made so far but didn't want to issue the exemption until after the latest round of talks with Iran, currently under way in Moscow.
Mr Frank Verrastro director of the Energy and National Security program at the Center for Strategic and International Studies said that "If they are helpful on the, I don't see why they won't get a waiver. But not everyone is convinced that China can avoid being sanctioned.”
Mr Trevor Houser an analyst at the Rhodium Group said China sanctions are within the realm of possibility. If China were to flout US demands and not reduce their imports from Iran, they would finance the purchases through a small bank that didn't do much business with the Untied States to begin with thereby limiting any impact sanctions might have.
Worldwide, Iran's oil exports have gone from about 2.2 million barrels a day to about 1.7 million barrels a day, as US and EU imposed sanctions over Tehran's nuclear program begin to bite. It's thought the sanctions might ultimately take a million barrels a day of Iran's oil off world markets by the end of the summer.
Source - CNN Money
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