China offered oil guarantees for deal

China is being privately reassured that its supplies of oil would be guaranteed in the event that it supports tough new United Nations sanctions on Iran, its third largest supplier of crude.

Western sources at the nuclear security summit in Washington confirmed "talks have been going in that direction" with China.

Such an agreement, designed to clear a major obstacle to consensus on new measures against Iran, may also have been discussed by President Barack Obama with Hu Jintao, the President of China, at bilateral talks this week at the White House.

Iran supplies an estimated 11 per cent of China's energy needs. Among oil suppliers to the Chinese it is only surpassed by Saudi Arabia and Angola. Were Iran to lash out and turn off the tap, the consequences for resources-starved China could be severe.

Diplomatic signals over what China intends to do about the sanctions issue remain muddled.

On Tuesday, White House officials said the talks between Obama and Hu had gone well and China was on board to negotiate the new sanctions which the US want to see in place within a few weeks.

But Chinese spokesman Ma Zhaoxu made no mention of sanctions on Iran in his statement after the Hu-Obama encounter and in Beijing Foreign Ministry officials again stressed finding a diplomatic solution to the stand-off.

David Miliband, the British Foreign Secretary, said: "I don't believe that China wants to find itself isolated in the international community when it comes to Iran."

He said China had a twin-track approach of trying to engage Iran diplomatically while moving towards punitive pressure.

The New York Times reported that the White House had quietly dispatched a senior envoy to the Gulf States, including Saudi Arabia, as long ago as last December to discuss what might be offered to China to reassure it.

That, other sources said yesterday, could extend to offering China limited drilling rights in the Gulf region.

"We'll look for ways to make sure that if there are sanctions they won't be negatively affected," a White House official told the New York Times in reference to China and the struggle to get sanctions agreed.

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