Russian Oil Exports To China Jump, Iran Shipments Continue
Latest official figures from China show its oil imports from Russia soared, displacing Saudi Arabia as top supplier, while continuing to buy cheap Iranian oil.
Latest official figures from China show its oil imports from Russia soared, displacing Saudi Arabia as top supplier, while continuing to buy cheap Iranian oil.
Russia shipped 8.42 million tons of oil to China, or about 61.5 million barrels in May, 55 percent higher than a year earlier after many countries stopped buying its crude after the invasion of Ukraine. This amounts to roughly 2 million barrels a day, while Saudi Arabia shipped 7.82 million tons. The figures came from the Chinese General Administration of Customs.
Previously it was reported that Iranian shipments to China had dropped by as much as 50 percent in May due to Russian competition, but the official Chinese figures, which show only a part of imports from Iran, do not indicate a drop, at least in the officially imported crude. Iran shipped 260,000 tons or less than 1.9 million barrels, which is just over 61,000 barrels per day.
But Chinese Customs figures do not reflect the full picture of Iranian oil imports, because of United States third-party sanctions, which could penalize companies buying Iranian crude. Most of Iran’s shipments go through Malaysia and are imported as such. Iranian tankers have been transferring their cargo to other tankers in Asian waters that carry it to China as oil coming from other countries.
Russia, Iran and Venezuela offer steep discounts to China, which despite less demand because of the COVID pandemic and a slowing economy, prefers to replace other supplies with oil from those sanctioned countries. As a result, more supplies from the Middle East and Africa will be freed up for countries that do not buy Russian oil. As of May, the extra Russian oil China bought amounted to around million barrels a day compared with 2021.
But any reduction of Iranian exports to China will have a serious impact on the finances of the government in Tehran that has embarked on eliminating subsidies, in a tricky and risky political balancing act.
In early May, it eliminated a food import subsidy that cost between $9-15 billion a year depending on whose figures one considers. Iranian officials are notorious for announcing widely different and sometimes contradictory economic data.
Next in line seems to be a reduction in huge fuel price subsidies. The elimination of these subsidies is impoverishing a low-paid population, fueling almost non-stop protests. The government promised cash assistance to low-income people in lieu of eliminating subsidies, but this would need oil income. Otherwise, the government must keep printing money with the risk of inflation becoming triple digit.
The government has a clear choice of reaching an agreement with the United States to restore the 2015 nuclear deal known as the JCPOA, which would lift crippling sanctions on Iran’s oil exports and international banking, but apparently it has been counting on illicit oil sales to China as a way of muddling through. In the meantime, it has accelerated it nuclear program, either to build more leverage in the talks or to actually achieve the status of a nuclear threshold country.
Most columnists and commentators welcomed the recent resignation of Raisi's Labor Minister Hojjat Abdolmaleki but said that many more ministers will have to leave the cabinet.
Nonetheless, some commentators including Reformist lawmaker Naser Ghavami said replacing current ministers with new ones cannot solve Iran's economic problems. He added that even the best economists cannot tackle the ongoing economic crisis because the underlying reason for problems is the political system itself.
Ghavami charged that the government has made Iran dependant on Russia and China, adding that the two countries simply follow their own interests.
Former lawmaker Mohammad Reza Khabbaz asked: "Do not these minister feel any shame even before their own conscience for accepting to be in charge of key ministries? On what basis has Raisi appointed them as ministers? And what do those who suggested these individuals think about the situation now?"
Khabbaz said that many more ministers from Raisi's cabinet need to go. Meanwhile, he called those ministers who promised to create one million jobs or build one million houses every year, "liars." He further asked: "Isn't what they have been doing a waste of the country's resources and the nation's dignity?"
Columnist Mohammad Shadi wrote in a commentary in Jahan Sanat newspaper that his publication has been in the market for nearly two decades and it was evident for its journalists that Raisi's ministers were not fit for their jobs. Shadi opined that at least two more economic ministers should leave the government.
Shadi wrote that Iran needs to prove that its economic policies are consistent with international norms if it wishes to attract foreign investment.
The new reformist daily Arman Emrooz, not to be mistaken with the very similar looking Arman Melli, wrote that "during the past ten months since Raisi took office, he has issued a major directive every 9 days. However, 3 out of every 4 orders have been ignored by those who had to carry them out."
The daily added: "Out of 37 official orders issued by Raisi, 27 of them have not been carried out at all, 6 have been carried out and another 4 have been abandoned halfway through their implementation."
Meanwhile, Tahmoures Hoseini wrote in an article in Toseh Irani newspaper: "Because of the government's performance, the divide between the people and officials has increasingly widened in recent years. The current government blames its predecessors and the members of the previous government blame the way elections are held in Iran.
The daily wrote that the rise in the number of protests is another indication of the government's failure while it keeps blaming the United States. The daily quoted Former lawmaker Gholamreza Jafarzadeh Imanabadi: "I should say clearly that I doubt the honesty of Raisi's economic team. Raisi needs to reshuffle his government and try to meet the promises he made to the people for their votes."
Economist Albert Boghossian wrote in Setareh Sobh that most of the complaints about the government have something to do with Raisi's broken promises. Boghossian also added that neither Raisi nor his economic team can make any difference while the system does not allow for reforms.
Despite all this, the administration-owned daily, Iran, says all is well, and quotes Raisi as saying, "There is no problem in Iran that cannot be solved."