January 17, 2025
I ran’s oil exports to China may just have suffered a serious blow, further threatening the Iranian economy. More than 90% of Iran’s oil exports are understood to go to China. Shandong Port Group has now banned US-sanctioned tankers from docking in its ports in the eastern Chinese province, home to many independent refiners that are the biggest importers of oil from countries under US embargo, Reuters quoted three traders as saying January 7.
The province imported about 1.74 million barrels per day (bpd) of oil from Iran, Russia and Venezuela last year, accounting for about 17% of China’s crude imports, ship tracking data from Kpler showed. Most Iranian crude is believed to go to Shandong ports. The port ban will drive up shipping costs for independent refiners in Shandong, the main buyers of discounted sanctioned crude from the three countries, the traders added.
In December, Washington imposed further sanctions on the “shadow fleet” that carries Iranian oil. The Shandong Port notice dated January 6 was obtained from two of the traders and confirmed by a third. It forbids ports to dock, unload or provide ship services to vessels on the US Office of Foreign Assets Control (OFAC) list of sanctioned tankers.
Shandong Port oversees major ports on China’s east coast including Qingdao, Rizhao and Yantai, which are major terminals for importing sanctioned oil. In a second notice January 7, also reviewed by Reuters, Shandong Port said it expects the shipping ban to have a limited impact on independent refiners as most of the sanctioned oil is being carried on non-sanctioned tankers. However, Reuters did not find that to be true.
It said that in December, eight very large crude carriers, with a capacity of two million barrels each, discharged mostly Iranian oil at Shandong, according to tanker tracker Vortexa.
It said four of those eightPhonix, Vigor, Quinn and Divine were sanctioned by OFAC. The active “shadow fleet” transporting Iranian, Russian and Venezuelan oil is estimated at 669 tankers, Michelle Wiese Bockmann, principal analyst with maritime data group Lloyd’s List Intelligence, told Reuters. A switch to using non-sanctioned ships could inflate costs for refiners in Shandong, which have been struggling with poor margins and sluggish demand, traders told Reuters.
In the last three months of 2024, OFAC added 35 tankers to the sanctions list for carrying Iranian oil to China. The price of Iranian crude sold to China hit its highest in years last month as the fresh US sanctions drove up costs. The Chinese refineries have been buying Iranian oil mainly because it sells for less. Iran has offered major discounts.
