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The move, which took many market participants by surprise, ends six months of waivers which had allowed Iran's eight biggest buyers of crude to continue to import limited volumes.
"Iranian exports will not actually reach zero," analysts at Eurasia Group said in a research note published Monday.
"China, which imports approximately 500,000 bpd (barrels per day), will make considerable cuts in the near term. For Beijing, securing the trade agreement with the U.S. is the top priority, and China will not link Iran oil imports to the trade talks."
China is Iran's largest crude oil customer, with total imports last year of approximately 29.3 million tons or about 585,400 bpd, according to customs data sourced by Reuters. That's roughly 6% of China's total oil imports.
On Tuesday, China's Foreign Ministry reportedly said it had formally complained to the U.S. over its decision to end waivers on sanctions of Iranian oil imports. Beijing said it was resolutely opposed to the move, adding its energy cooperation with Tehran is lawful and reasonable.
Alongside India and six others, China was one of the eight global buyers of Iranian crude that won exemptions from the U.S. last November.
The dispute over importing Iranian crude adds another fault line to increasingly fraught ties between Washington and Beijing. The world's two largest economies have been locked in a protracted trade war, souring business and consumer sentiment and battering financial markets.
Nonetheless, despite the threat of sanctions and a heightened risk of further complications in the long-running trade conflict, analysts at Eurasia Group said they expect China to continue buying Iranian crude, perhaps as high as several hundred thousand barrels per day, to save face.
"We think that China can't and won't back down this time and we could easily see an increase of Chinese oil imports from Iran up towards maybe 1 million bpd," Bjarne Schieldrop, chief commodities analyst at SEB, said in a research note published Tuesday.
"There will also be an increasing amount of oil exports out of Iran which will go 'under the sanctions radar'… It will drive Iran closer to China and enable China to settle yet more oil in renminbi," Schieldrop added.
India will likely take a similar position to China, Eurasia Group analysts added. New Delhi is the second-largest importer of Iranian oil, after Beijing.
"New Delhi will cut imports substantially but probably maintain approximately 100,000 bpd of Iranian imports paid for using a rupee payment system. This is less an energy security decision than a political one."
"In the past several months India has worked hard to significantly diversify its energy sources in preparation for this situation. But India's ties with Iran are significant and historic, and New Delhi will work hard to maintain some links," Eurasia Group analysts said.
India's Petroleum and Natural Gas Minister Dharmendra Pradhan said Tuesday that New Delhi would get additional supplies from other major oil producing countries in order to offset the loss of some Iranian imports.
Pradhan said via Twitter that India had a robust plan to ensure the adequate supply of crude oil to refineries over the coming months.
"Indian refineries are fully prepared to meet the national demand for petrol, diesel and other petroleum products," he said.
On Monday, Trump said OPEC kingpin Saudi Arabia and other countries in the Middle East-dominated producer group could "more than make up" for any drop in Iranian oil supplies to global markets now that waivers were set to be removed.
In response, the oil-rich kingdom said it would work with other oil producers to provide ample supply and a balanced market.