China's crude oil imports from Iran jumped 53.2% year on year to 2.65 million mt or an average of 648,561 b/d, the highest in more than two years, figures released by the General Administration of Customs over the weekend showed.
June's crude oil imports were the highest since May 2009, when China imported 3.1 million mt or an average of 730,161 b/d from Iran.
Chinese refiners appeared to have bought more crude oil from Iran even as India has been having a payment dispute with Iran, industry sources said.
"China has no issue on payment. If the price is low, why not?" said a Chinese crude oil trader.
The UK's Financial Times reported on Sunday that US financial sanctions had blocked Chinese oil payments worth $20 billion to Iran and that the two countries are holding talks to develop a barter system to exchange Iranian oil for Chinese goods and services.
The start of South Pars condensate term supply since the beginning of the year has boosted overall volumes from Iran, but this was probably not a major contributing factor as the term supply volume is only 66,667 b/d a month, traders said.
Unipec, the trading arm of state-owned refiner Sinopec, has a contract with the National Iranian Oil Company for the supply of about 24 million barrels of South Pars condensate for 2011, making it the single biggest lifter of Iranian condensate.
India owes over $5 billion to Iran as payments came to a halt in December when the Reserve Bank of India banned transactions through Tehran-based Asian Clearing Union.
Iran, which supplies around 400,000 b/d of crude to the South Asian country, wrote to Indian refiners last month that if payments for supplies made so far were not settled and a settlement mechanism worked out, there would be no shipments from August.
"Things should have happened quite a while ago, especially if there are billions uncollected," a crude trader based in Singapore said, referring to payments from both India and China.
In the first six months of this year, China's imports from Iran totaled 13.47 million mt, or 545,614 b/d, up 49.4% from the same period last year, according to the latest official customs data.
For all of 2010, China's imports from Iran totaled 21.3 million mt.
June was also the first time since May 2009 that crude imports from Iran had surpassed volumes from Angola, which was the third-largest supplier last month.
China imported 1.98 million mt, or an average of 484,692 b/d, of crude oil from Angola in June, 46.9% less than a year earlier.
OPEC kingpin Saudi Arabia remained the top crude supplier at 3.9 million mt or 952,449 b/d, which was 6.2% more than a year ago.
