OREANDA-NEWS. December 03, 2013. Iran expects its crude-oil exports to China will stabilize despite political pressure from the U.S. and a drop in shipments so far this year, an executive at Iran's state oil company said.

China's October crude imports from Iran fell 42% to 1.06 million metric tons, or 390,000 barrels a day, from the same period a year earlier, Chinese customs data showed Thursday. The steep drop in October brings China's Iranian crude imports to 17.1 million tons in the January to October period, down 3% from the same period last year.

The drop makes it increasingly likely that Washington and Beijing will avoid a clash over imports from Iran.

However, the decline may be only temporary, said Maziar Hojjati, managing director of the China office of National Iranian Oil Co. He expects imports will recover in December and end the year almost unchanged compared with last year.

"There were technical issues at some Chinese refineries that prevented [imports to China] last month, but we hope that by the end of the year, we will fully supply our contracted volumes," he said on the sidelines of a conference in Shanghai.

October's import numbers are significant because they will be the last used by the U.S. State Department in deciding whether Beijing qualifies for a renewal of its waiver from sanctions, which expires in late December.

The U.S. has stepped up sanctions against Iran over the past decade in response to Western charges that Tehran is seeking to develop nuclear weapons—charges the Iranians deny. In late 2011, Congress passed a law penalizing financial institutions that conduct oil trades with Iran's central bank by banning them from doing business in the U.S.

However, the State Department has been given the flexibility to exempt countries that show a "significant"—though unspecified—reduction in Iranian crude purchases. That has stemmed run-ins with fast-growing Asian countries that depend on Iranian oil.

In a daily press briefing on Thursday, China Foreign Ministry spokesman Hong Lei said Iran's oil cooperation with China "is transparent and legal and is not against the relevant regulations of the United Nations."

China, which relies on Iran for about 7% of its crude imports, won its third exemption from sanctions in June. The exemption came even though Iranian crude imports between January and April—the period used to determine the exemption—were up 11% from the same period last year.

Nuclear talks resumed this week in Geneva between Iran and the five permanent members of the U.N. Security Council, which include the U.S. and China.

China already cut its crude imports from Iran by 21% in 2012 from 2011. Analysts and industry insiders say they didn't expect China to be able to reduce imports any further because reconfiguring a refinery to process another type of crude isn't easy.

Meanwhile, China's imports of Iranian fuel oil have surged this year, a practice the U.S. doesn't take into account when determining the waiver. China imported an additional 180,000 tons in October, bringing total imports this year to 1.4 million tons worth \\$840 million, customs data shows.

China has a significant amount of small refineries, called teapot refineries, that are configured to process fuel oil—a cheap byproduct of refining—rather than crude. This gives China the ability to make more valuable fuels such as gasoline and diesel without the need to raise crude imports.