US Blockade Hits Iranian Oil Exports to China

The US blockade on Iranian shipping and ports has led to a significant decline in oil sales to China, according to trade sources. The reimposition of the blockade on July 13 has restricted Tehran's ability to export crude oil, which is a crucial source of foreign currency for Iran.

Iranian exports have fallen sharply since mid-July, with no visible Strait of Hormuz crossings by supertankers carrying Iranian crude, according to ship-tracking firm Kpler. Many vessels switch off their transponders, making it difficult to track them.

The tighter supply is affecting independent refiners in China's Shandong province, known as teapots, which account for about one-fifth of the country's refining capacity and are major buyers of sanctioned crude. Some Iranian oil that was normally sold at discounts is now being offered at premiums to ICE Brent futures.

Chinese refiners are turning to other suppliers as a result of the uncertainty surrounding Iranian supply. One Chinese independent refiner bought Brazil's Lapa crude this week, while others considered Iraq's Basrah crude. China imported an average of 1.4 million barrels per day of Iranian crude last year, but imports have fallen sharply since the blockade was reimposed.