Speculations are rife that this could prompt Iran to shut the strategic chokepoint of Strait of Hormuz, debilitating oil supplies from the Persian Gulf and proving to be a catalyst for Iranian attacks on neighboring oil facilities. So, oil prices could spike despite the buffer of Saudi spare capacity and Latin American supply channels.
Such acts could also jeopardize Sino-Iranian relations as Beijing continues to navigate alliances with Moscow and Riyadh while seeking modus vivendi with Washington in a complex politico-economic scenario.
Being aware of China's economic slowdown and consistent monthly decline in refinery runs, Iran is scouting for buyers besides Chinese state oil companies and 'teapots' (small independent refiners based mostly around Shandong province).
Having 10 percent of the world's oil reserves and being home to an impressive automotive industry, the Islamic republic is desperate to revive its economy, emulating Saudi Arabia, Kuwait and the UAE.
Most of its oil is currently routed to China and paid for in renminbi. While such revenue is partially offset via import of Chinese equipment and technology, the balance constitutes Tehran's external reserves with lesser-known banks in mainland China and Hong Kong, often considered conduits for money laundering and layering.
Iran also nurtures hopes of nuclear cooperation with the US for energy and scientific research, especially after a prisoner exchange and the promised release of oil funds in Qatar's custody since 2023.
This story is from the October 30, 2024 edition of The New Indian Express.
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This story is from the October 30, 2024 edition of The New Indian Express.
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