Oil Flows from Iran to China Surge after Removal of Bottlenecks
Oil shipments from Iran to China have rebounded this month as traders overcame logistical challenges stemming from tighter U.S. sanctions. Buyers in the world's top oil importer have been able to clear a backlog of cargoes due to an increase in ship-to-ship transfers and the emergence of alternative receiving terminals.
Preliminary data from Kpler Ltd. indicates that imports in February could reach 1.74 million barrels per day, a significant increase of 86% compared to January and the highest since October.
China remains the primary destination for Iranian crude, primarily purchased by smaller, independent refiners known as "teapots." The trade serves as a critical revenue source for Iran, despite ongoing pressure from U.S. sanctions, including recent tightening measures imposed by the Trump administration.
The U.S. Treasury Secretary, Scott Bessent, emphasized that the U.S. aims to reduce Iran's oil exports to less than 10% of current levels. He condemned the purchase of sanctioned oil by China and possibly India, calling it "unacceptable."
Scrutiny of Iranian oil trade intensified towards the end of the Biden administration, resulting in sanctions against dozens of tankers, traders, and shippers. However, traders report that the supply chain has adapted swiftly, utilizing unsanctioned tankers and new shell companies to maintain operations.