US Blockade Drives Down Iranian Crude Supplies to China

Iran's crude oil supplies to China have significantly declined due to the US blockade, causing concerns over further sanctions against Iranian oil buyers.

The number of Iranian cargoes offered for September and October delivery has dropped from July and August levels as barrels already at sea have been sold. This decline is attributed to the US blockade, which restricts Tehran's oil shipments. Data from Kpler shows no visible supertanker crossings of the Strait of Hormuz carrying Iranian crude since mid-July.

Iranian crude in floating storage outside the blockade zone has decreased to around 80 million barrels, down from approximately 105 million barrels before the blockade was reinstated. This indicates that about 40 million barrels are currently aboard vessels near Malaysia and Singapore, most of which have already been committed to buyers.

The supply squeeze has pushed Iranian Light crude from a discount of around $3/bbl to a premium of about $2/bbl over ICE Brent in recent days. China's independent 'teapot' refiners in Shandong, which account for 20% of China's refining capacity, are major buyers of sanctioned Iranian oil. Some refiners have begun seeking alternatives, including Brazilian Lapa and Iraq's Basrah crude.