Iran-China Oil Trade. Impact of the sanctions on the oil cooperation between Iran and China

Master's Thesis from the year 2018 in the subject Economics - Foreign Trade Theory, Trade Policy, grade: 10, , course: Thesis, language: English, abstract: China and Iran have had a long history of economic, social, and military cooperation which spans over hundreds of years ago. This kind of cooperation has been preserved up to the present moment in which the relationship between the two countries is more directed to mutual economic benefits. While Iran benefits from military and technological support from China, China obtains oil to fuel its rapidly growing economy since the amount it produces on its own is not sufficient to run the economy. Ultimately, the relationship between the two countries has culminated into an oil cooperation in which China has been entrusted with a majority of oil exploration tenders in Iran especially during the period in which economic sanctions had been issued against Iran. China remained an ally to Iran despite calls from the Western economic giants for the abandonment of bilateral relations with Iran as a punishment for its refusal to abide by the nuclear deal initiated by the United States. As a result, the oil cooperation has deepened mainly because China has been the main partner to Iran in a period during which economic sanctions were hitting hard on the country’s economy. However, the sanctions were recently lifted, allowing Iran to go back to the global oil market.The main aim of this study was to assess the impact the lifting of the sanctions could have on the oil cooperation between Iran and China. The researcher implemented a quantitative approach in which three measures were performed; the value of Iran’s oil-related exports to China prior to and after the lifting of sanctions, the value of Iran’s exports to the entire world prior to and after the lifting of sanctions, and the value of Iran’s exports to China expressed as a percentage of the total value of Iran’s oil-related exports to the world. Findings illustrated that the value of Iran’s oil exports to China indicated a rising trend prior to the lifting of economic sanctions and a falling trend after lifting of the sanctions. On the other hand, Iran’s exports to the entire world illustrated a falling trend prior to the lifting of sanctions and a rising trend after lifting of sanctions. China’s falling trend indicates that bilateral relations between China and Iran are reducing since Iran is focusing more on the global oil market (rising trend for the oil exports to the world).