China's state-owned refiners are considering resuming Iranian oil purchases, but competing alternative supplies and falling domestic fuel demand will temper their interest, said several industry sources.
Any purchases would be the first since 2019 when Sinopec and PetroChina bought Iranian crude shortly after US President Donald Trump reimposed sanctions on Tehran's petroleum exports in his first term.
PetroChina and Sinopec are examining the banking, insurance and shipping considerations needed to resume their Iranian transactions, said three of the sources, officials at Chinese state oil companies who spoke on condition of anonymity as the subject is sensitive.
The decision follows Monday's US waiver allowing global customers to buy Iranian oil and petrochemical products and settle in US dollars after the memorandum of understanding signed last week that ended the US-Israeli war with Iran.
"Let's see who might be the first to eat the crab," said one of the three sources, using a Chinese idiom referring to the first person to take up something new, who also pointed out there is no shortage of oil as exports from Saudi Arabia, Kuwait and Iraq are rising.
It is also unclear which banks could provide financing and clearing for the deals and if Iran has the shipping capacity to deliver the cargoes, the source added.
Sinopec and PetroChina did not immediately reply to emails seeking comment.
Asian refiners, including Chinese, are well stocked despite supply disruptions from the Middle East because of the war by securing cargoes from West Africa, Brazil and Russia. Middle East shipments from Persian Gulf suppliers are expected to rebound with the reopening of the Strait of Hormuz under the interim peace deal.
Iranian oil loadings accelerated to around 1.6 million barrels per day between June 19 and June 24, versus 340,000 bpd during the first 18 days of June and 370,000 bpd in May, according to tanker tracker Vortexa.
State firms are also unlikely to resume Iranian oil buying because of tepid domestic demand, said a second state oil official, as declines in Chinese fuel and petrochemical consumption have outpaced recent cuts in the country's crude imports and refinery throughput.
For now, Chinese independent refiners known as teapots remain the key Iranian crude buyers, dealing with a group of obscure middlemen and mostly settling their purchases in Chinese yuan.
Among the state majors, Sinopec could emerge as a readier buyer, as the refiner, once Tehran's single-largest customer, has faced deeper crude supply cuts and needs to replenish inventories after having to draw on commercial stockpiles since May, two of the three Chinese sources said.
Sinopec enquired with National Iranian Oil Company about possible purchases under the previous 30-day waiver in March, before deciding against it as the window was too narrow to complete a transaction, said an industry official close to the Iranian company.
NIOC, which operates a marketing team each in Beijing and Shanghai, is anticipating renewed interest from state refiners in the coming days, the official said.
NIOC will be the sole contractual party for oil under waiver, and Russia's main export grade ESPO blend will be used as a pricing reference for potential new deal discussions, the official added.
NIOC did not immediately reply to an email seeking comment.
(Reporting by Chen Aizhu; Editing by Florence Tan and Christian Schmollinger)