Crude oil exports from Iran to its biggest buyer, China, shrank last month on tighter U.S. sanctions and refinery maintenance, Bloomberg has reported, citing data from Vortexa.
Per that data, Iran shipped a little over 1.1 million barrels of crude to China daily, which was 20% lower than export flows in May 2024. Compared to April, the May figure is around 400,000 bpd lower. The data is not entirely certain, however, as tankers carrying Iranian crude abroad use a variety of moves to mask their origin and route.
Kpler recently reported that a growing number of tankers carrying Iranian oil to China were now switching off their tracking devices that conceal their location. “Ship-to-ship transfers have been used to mask the origin of those cargoes,” a Kpler analyst told Bloomberg last week. “Now they’re switching signals off for longer, so that it’s now even harder to trace those flows back to the source, which is Iran,” Muyu Xu also said.
Going forward, oil flows from Iran to China are likely to remain weaker than usual due to refinery maintenance, according to one Vortexa analyst, who said that “delayed seasonal refinery maintenance, […] is now expected to extend through July.” Chinese refiners also stocked up on cheap Iranian crude earlier in the year before Washington tightened the sanction noose, so their inventory levels should be quite comfortable for the time being.
China is Iran’s biggest oil client, with the country’s private refiners buying most of Iran’s sanctioned crude. The two sides have established a trade relationship favorable for both. Iran gets to sell its crude that nearly everyone else shuns, while China’s independent refiners, the so-called teapots, get cheap oil.
The U.S. and Iran are currently negotiating a new nuclear deal that could see the Trump administration lift sanctions but for that to happen, Iran would have to agree to completely suspend any uranium enrichment activities. Tehran has indicated it is not willing to do that.
By Irina Slav for Oilprice.com
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