Chinese Oil Giant Cuts Off Fuel Sales to North Korea

Chinese Oil Giant Cuts Off Fuel Sales to North Korea

China’s largest supplier of fuel to North Korea has halted sales amid growing pressure on Pyongyang, according to Reuters.

State-owned oil giant China National Petroleum Corp (CNPC) reportedly suspended exports, citing worries that agents will not be able to provide the up-front payments it requires. Banks and companies involved with North Korean trade are now under increased scrutiny, though it is not clear if sanctions are related to CNPC’s decision.

The isolated northeast Asian country imports almost of its oil and gas from China; most of that comes through CNPC. The risks of doing business with North Korea have grown steadily in recent months as the United States has ratcheted up pressure in response to Pyongyang’s frequent missile launches. CNPC’s move to stop fuel sales results from business risk, according to the Reuters report, rather than from a change in official Chinese policy.

Frequent missile tests and advances in North Korea’s nuclear capabilities have put regional states on edge and created a major foreign policy test for U.S. President Donald Trump. U.N. sanctions forbid the sale of rocket, jet, and certain kinds of aviation fuel, though oil and gas for civilian purposes has not faced restrictions. U.S. officials have floated the idea of an oil embargo as one possible measure to force the rogue regime to roll back its nuclear program.

Without Chinese oil, “North Korea would not survive on its own for three months and everything in North Korea would be paralysed,” Cho Bong-hyun, a specialist on the North Korean economy at Seoul’s IB Bank, told Reuters in April.

The United States might hope to bring Pyongyang to its knees, but for China that would be a nightmare scenario. The last thing Beijing wants is a destabilized nuclear-armed North Korea and millions of destitute refugees pouring over its northern border.

Still, temporary cuts to fuel exports is one way for Beijing to send a clear message to its neighbor. China has previously used such messages to pressure Pyongyang.

In 2003, China closed an oil pipeline supplying North Korea for three days. Chinese officials said the closure was due to technical problems, but diplomats said that the true intent was to put pressure on Pyongyang amid heightened tensions with the United States over its nuclear program. A few months later, North Korea joined six-party talks with the United States.

Beijing has worked to bring its coal-hungry importers in line with U.N. sanctions, essentially banning the import of North Korea coal in February.

But overall trade between China and its northern neighbor actually grew in the first quarter of 2017 despite U.S. pressure. Trump, who had made China the center of his approach to pressuring North Korea, has reportedly grown frustrated with Beijing’s refusal to wield its full influence over Pyongyang.

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