Earlier, US media reported that the State Department was seriously considering ‘allowing’ China to continue importing Iranian oil, with the alternative being to let Beijing ‘openly defy US sanctions’ as the country continues to take in more and more shipments of Iranian oil.

China has apparently found a way to legally bypass the threat of US sanctions in its imports of Iranian oil: by putting the oil in bonded storage at the country’s ports, Bloomberg has reported, citing industry watchers.

“Iranian oil shipments have been flowing into Chinese bonded storage for some months now, and continue to do so despite increased scrutiny,” Rachel Yew, an analyst at FGE, a Singapore-based industry consultancy, said.

“We can see why the producer would want to do so, as a build-up of supplies near key buyers is clearly beneficial for a seller, especially if sanctions are eased at some point,” Yew added.

According to ship-tracking data published by Bloomberg, China received over three million tonnes of Iranian crude oil in April, before the US’s sanctions exemptions for several major importers of Iranian crude oil expired on May 2.

Through the month of May, Chinese imports continued, albeit at a reduced level, with over a million tonnes of oil making their way to China, and a similar amount cleared by Chinese customs. In June, however, although another million plus tonnes of Iranian crude arrived at Chinese terminals, none of it was cleared by customs, appearing indicating that China was not violating the US sanctions.

Chinese officials have not commented on the story.

China doesn’t seem set on halting the oil imports anytime soon, with at least a dozen tankers with a combined carrying capacity of over 20 million barrels of crude presently on route toward China or idling off the country’s coast, according to ship-tracking data.

Earlier this month, three US officials told Politico that the State Department was considering making an exception for China in its anti-Iranian energy sanctions, possibly by reviving an Obama-era sanctions loophole allowing China to continue imports for payment in kind deals, including the payment of outstanding debts to Chinese energy giant Sinopec, which has been engaged in developing Iranian oil fields.

Before that, China reportedly allowed at least two Iranian crude oil tankers to dock at its ports in spite of US efforts to bring Iranian oil exports down “to zero”. Beijing’s actions prompted some US lawmakers to attack the Trump administration for its apparent inability or unwillingness to enforce the sanctions, with one former State Department official saying there wasn’t much Washington could do “if China says, ‘Screw you’.”

Before the US waivers on Iranian crude purchases were scrapped in May, China relied on Iran for about 20 percent of its oil imports.

Most of the other countries which had enjoyed sanctions waivers, including India, Italy, Japan, South Korea, Greece and Turkey appeared to have bowed to US sanctions threats, and reduced their oil imports from Iran, either substantially or totally.