What rate will China buy Iranian oil?

Wondering how much we think China will play, continue to play with Iran. Paying for oil with promises to invest is right up their alley, and the embargo is questionably enforceable if you don't pay in dollars. There is enough China/Iran trade to probably skip the petrodollar issues. Sideways blowback can be an issue. Wondering how far this one goes. No matter what anyone says, if satellites show big tankers at the dock, they are unloading.

https://www.ft.com/content/6b944786-9809-11e9-8cfb-30c211dcd229

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(edited)

15 hours ago, John Foote said:

Wondering how much we think China will play, continue to play with Iran. Paying for oil with promises to invest is right up their alley, and the embargo is questionably enforceable if you don't pay in dollars. There is enough China/Iran trade to probably skip the petrodollar issues. Sideways blowback can be an issue. Wondering how far this one goes. No matter what anyone says, if satellites show big tankers at the dock, they are unloading.

https://www.ft.com/content/6b944786-9809-11e9-8cfb-30c211dcd229

John, it’s probably going to go the same route as India and avoid paying in USD, I don’t think the price would change at all, no reason at all that Iranian crude should be sold cheaper due to sanctions. May even be more expensive due to the logistics required to ship the oil. 

China undoubtedly paying in cash and goods.

below from web regarding Iran India China 

Hinting that it wants to extend oil trade with Tehran, New Delhi recently issued a notification exempting payments to the National Iranian Oil Company (NIOC) for crude oil imports from steep withholding taxes, enabling refiners to clear an estimated $1.5 billion in dues.

 

Meanwhile, in lieu of transacting in dollars, Iran is devising payment mechanisms including barter with trading partners like India, China and Russia following a delay in the setting up of a European Union-led special purpose vehicle to facilitate trade with Tehran, its foreign minister Javad Zarif said earlier on Tuesday.

As Reuters notes, in the previous round of U.S. sanctions, India settled 45% of oil payments in rupees and the remainder in euros but this time it has signed deal with Iran to make all payments in rupees as New Delhi wanted to fix its trade balance with Tehran.  Case in point: Indian imports from Iran totalled about $11 billion between April and November, with oil accounting for about 90 percent.

Edited by James Regan

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James, while it is also my view that Iran will continue to ship to its long-time customers, USA "embargo" or no, that would not imply that the price will not be discounted.  Any buyer has to account for the risk factor of being found out and then incurring a secondary boycott, which is what the US threats are all about.  I would place a value on that of perhaps $12/bbl.  

I also don't think Trump cares that much.  Trump has two competing desires: to punish Iran, and to keep gasoline retail prices tamped down to avoid a voter backlash.  If Iranian crude gets into the market (and I predict it will), then as long as the net receipts to Iran are suppressed, trump achieves that short-term goal.  So, bottom line:  Iranian crude will slip out, however disguised, as long as it does not head for Syria, and that extra supply will avoid runaway trader speculation and price surcharges. 

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