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News number: 9104253877

14:31 | 2012-08-12

Economy

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Iranian Envoy Rejects Sales of Cheap Oil to China

TEHRAN (FNA)- Iranian Ambassador to Beijing Mehdi Safari dismissed recent media reports that Tehran is selling its oil at a lower price to China.



"The prices are at standard levels and this is the policy of the oil ministry," Safari told reporters in Beijing on Sunday, and reiterated, "All the things that are said about this issue (selling cheap oil to China) are rumors."

Noting that China needs the Iranian oil and imports 10 to 12 percent of its needs to oil supplies from Iran, he said, "We have five-year and seven-year contracts with China and we hope to still improve the present atmosphere through our efforts."

Recent reports said that China bought more crude from Iran in June than it did on average last year.

Iranian oil shipments rose 17 percent from May to 2.6 million metric tons, or about 635,000 barrels a day, according to Bloomberg calculations from data e-mailed by the Beijing- based General Administration of Customs on July 23. China bought 2.3 million tons of crude from Iran on average each month, or about 557,000 barrels each day, last year.

China, Iran's biggest crude customer, calls its purchases "completely justified and legitimate". June's imports reached the highest in 11 months and was the third-straight month of expansion, after China cut back buying in the first quarter while negotiating a payment dispute with Iran's national oil company.

"Many Chinese refineries are designed to process only Iranian crudes and not other grades," Gordon Kwan, the Hong Kong-based head of regional energy research at Mirae Asset Securities, said, indicating that the figures show China would not give a positive response to the Western countries, specially the US, which have demanded it to lower crude imports from Iran.

The European Union enforced a set of new sanctions against Iran's oil supplies on July 1.

Iran's share of China's overseas purchases rose for a fourth month, according to Bloomberg calculations based on the customs data. Crude from the country accounted for 12 percent of total imports in June, up from 9 percent in May and the highest since October.