Iran's Oil Shipments Plummet Amid US Blockade

Iran's oil shipments to China have declined this week due to the US blockade, trade sources say. Offers for Iranian crude to Chinese buyers have dropped from July and August levels, with some cargoes being sold at premiums rather than discounts. Typically, Iranian Light was offered at a discount of around $3 a barrel, but now it's being sold at a premium of about $2 a barrel. This shift in pricing suggests that the US blockade is severely impacting Iran's oil exports.

Kpler data shows that Iranian crude held in floating storage outside the US blockade zone has fallen to 80 million barrels from around 105 million before the blockade was reinstated. Only about 30 million barrels of Iranian crude remain in Asian waters, half the usual level. Senior Crude Oil Analyst Muyu Xu estimates there are 40 million barrels on ships in Malaysian waters east of Singapore, but most of that has been promised to buyers.

This means that buyers could face virtually no new Iranian supplies available for late-September delivery onwards since no laden Iranian tankers have managed to break through the US blockade, according to Xu. The threat of more sanctions from Washington is also looming, further limiting Iran's oil exports.