Slowing imports from China have pushed the volumes of Iranian oil held in tankers at sea to the highest level in two and a half years.
The volume of Iran’s crude in floating storage has jumped in recent weeks and widened the discount of Iranian grades to international benchmarks.
As many as 52 million barrels of Iranian oil is stashed on tankers at present, nearly double compared to October, according to data from energy flows intelligence firm Kpler cited by Bloomberg.
In comparison, early this year the volumes of Iranian crude in floating storage was only about 5 million to 10 million barrels in January.
The last time more than 50 million barrels of Iranian oil was held in tankers was in May 2023, according to Kpler’s data.
Iranian oil exports have held relatively high all year, but its key customer taking more than 90% of the exports, China, has slowed imports in recent weeks.
Two have been the main reasons for the lower Chinese uptake of Iranian crude in November. The teapots, the key Iranian oil customers in the Shandong province, are running out of government quotas to import crude oil. Moreover, the recent U.S. sanctions on Chinese entities for importing Iranian oil have deterred some buying.
The Chinese teapots have become more careful in handling Iranian crude oil, after the U.S. Treasury last month imposed sanctions on the Rizhao oil terminal as part of the pressure campaign on China over its purchases of Iranian crude.
As a result of China’s currently lower appetite for Iranian oil, the discount of the Iran Light blend has surged to $8 per barrel to ICE Brent, double from the $4 a barrel discount in August, traders with knowledge of the market told Bloomberg.
Despite the current aversion to sanctioned barrels, China is not expected to halt purchases of either Iranian or Russian oil – it just needs time to rearrange the supply chains and ship-to-ship (STS) transfers to evade sanctions effectively again, analysts say.
By Tsvetana Paraskova for Oilprice.com
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