Friday, March 21, 2025
by Warren L. Nelson
The Trump Administration re-launched its Maximum Pressure campaign March 13 with a Now Ruz gift of sanctions on 10 tankers that carry Iranian crude to China. There’s no sign yet that the Maximum Pressure 2.0 campaign Trump launched 1.0 in 2018 during his first term is working.
But it’s too soon to tell. Iran’s oil export level in April will be the first serious measure of success or failure. Crude exports plummeted in January, the last month of the Biden era, then rose in February, the first month of the Trump era. In fact, according to Vortexa, one of the firms that try to track Iran’s oil exports, Iran’s crude unloaded in China in February averaged 1.4 million barrels of oil a day or more than the average throughout 2024 under Biden and a huge rise above the 800,000 b/d average of January, a two-year monthly low. It must be noted, however, that all such figures are estimates and the estimates vary.
Kpler, another firm watching Iranian crude exports, said the January total was even lower at 692,000 b/d while the February surge was much less at 771,000 b/d. But a) the Trump appointees had not had much time to have any impact in February and b) much of the oil delivered in February had already been bought before Trump took office, so the February figures are meaningless as an indicator of anything.
The early March figures didn’t show any significant change from February. But the Trump impact will only begin to appear after Now Ruz, so everyone must just wait for now. On March 13, the Trump Administration released the third batch of sanctions against Iran since it took office. The first two batches likely were prepared by the Biden team. The third batch has the Trump mark on them. That batch sanctioned only one individual.
But it was Oil Minister Mohsen Paknejad. This was more symbolic than substantive. The sanctions freeze Paknejad’s assets in the United States—and if he has any such assets, it would be his political death in Iran. But the list then targeted 17 businesses that serve as fronts for Iranian oil exports. The 17 firms are located in 11 countries, with none of them in Iran not a good country to be home for a firm trying to mask sales of Iranian oil. Again, the sanctions freeze those firms’ assets in the United States. And, since the firms were created to hide Iranian oil transactions, it would be foolish for them to have any assets in the US.
But those firms have now been named and tabbed as Iranian fronts, so others who want to abide by US sanctions and do not wish to aid Iran have been notified and will know to avoid any dealings with those 17 firms such as Celestite Maritime Inc., which was established March 5, 2024, in the city of Majuro in the Marshall Islands in the Western Pacific. Next, the new list cited 13 vessels, 10 of which are crude oil tankers while the other three are tugs.
The tankers include the Shannon II, flying the Barbados flag and linked to Celestite Maritime Inc. All the tankers are linked to the front companies. The main Chinese ports, where Iranian oil has been unloaded for years in Shandong province, will no longer handle sanctioned tankers. But that doesn’t mean the Shannon II can no longer carry Iranian crude to China, just that it can’t unload next to the refineries that have long been buying Iranian crude.
The point is not that the sanctions stop Iran from sending oil to China via these tankers and these front companies. But the sanctions make it more complicated and more expensive for Iran to do business. The sanctions disrupt Iran’s oil trade; they don’t block it. Traders and middlemen in those front companies and others that may be in the process of formation right now must re-arrange tanker sailings and scheme more ship-to-ship oil transfers to hide what they are about.
Ja Ian Chong, associate professor of political science at the National University of Singapore, told Bloomberg news that sanctions are typically designed to make trade so uneconomical that it is impractical, but not impossible. Bloomberg indicated that the United States has now sanctioned about three-quarters of all the 150 tankers that were used to deliver Iranian crude to China last year. And Iran International said in February that more than half the tankers sanctioned by the US had dropped out of the Iran China transit business.
(Again, different firms produce radically different numbers. Tanker Trackers says 522 tankers have been carrying Iranian crude and that fewer than half have so far been sanctioned by the US.) All this has burdened the Iran-China trade with much higher freight costs, even before Trump came into office with Maximum Pressure 2.0. Bloomberg said traders told it that under Biden the chartering rate for a non-sanctioned tanker carrying Iranian crude from off Malaysia to China had risen 50 percent over the last year to $6 million per voyage.
The waters off Malaysia and Indonesia are where Iran usually transfers crude from tankers that loaded it at Kharg Island in the Persian Gulf to tankers that will carry it to China, all part of the complex effort to hide the origins of the oil. One shift noted by some traders is that Iran appears to be using more small tankers because they can dock and unload at Chinese ports that have shallower anchorages, unlike the ports Iran had been using to date that could take giant tankers carrying 2 million barrels.
Many of those larger ports closed to Iran January 6 when the Shandong Province port authority banned all sanctioned tankers from its ports. More crude is now being unloaded at ports in southern China and then re-loaded on unsanctioned tankers to be ferried to Shandong, where most of the small “teapot” refineries that like Iranian crude are located.
China has long taken more than 90 percent of all the crude Iran exports. The only other country taking any large volume has been Syria but those deliveries fell to zero late last year after President Bashar al-Assad was booted out. Syria got oil on credit. It isn’t known how much Syria owes, though it must be in the multiple billions of dollars. There is no chance now that Iran will receive any payments but there wasn’t much expectation that Assad would have paid either.
As a practical point, it may actually be better for Iran economically that it has been able to shed Syria as a crude client. The Biden Administration and so far the Trump Administration have focused their sanctions on the ships that carry crude and the front companies that operate those tankers.
But Anoop Singh, head of shipping research at Oil Brokerage Ltd., told Bloomberg there are other critical nodes of the delivery system that could be targeted, such as banks, insurers and governments that flag ships. Trump appointees have mentioned these other nodes of the delivery system and can be expected to take out after them in the coming months. Meanwhile, the price of a barrel of OPEC oil has plunged since Trump took office by $10 a barrel or 12 percent, further impinging on Iran’s revenues.
That decline is largely the result of OPEC deciding to pump more oil starting in April while global demand remains weak. Reuters said OPEC’s decision would add 138,000 b/d to the market with increasing volumes in succeeding months.