Iranian crude oil shipments to Chinese independent refineries appear to have remained steady following a surge in February. Despite the new imposition of U.S. sanctions, which could impact the delivery of approximately 2.87 million barrels later this month, trading and refining sources report a resilient inflow.
On March 13, the U.S. government added nine crude tankers to its sanctions list due to their involvement in transporting Iranian oil. Of the total 232 vessels identified as facilitating Iranian crude exports this year, 163 are currently sanctioned by the U.S. Treasury’s Office of Foreign Assets Control.
Traders indicate that this reduction in available non-sanctioned vessels affects the shadow fleet’s operations. However, Iranian oil flows to China remain sustainable until the next sanctions round, as certain private ports still accommodate sanctioned Aframaxes.
Demand for competitively priced crudes remains robust, ensuring continued imports. Four of the nine recently sanctioned vessels were active in March, with ships such as Blue Gulf and Lydya N set to deliver 2.87 million barrels from Malaysia to China.
Typically, Iranian oil barrels complete ship-to-ship transfers in Malaysian waters, acquiring Malaysia-origin certificates before reaching China. In terms of pricing, Iranian Light crude has held steady at a discount of about $1 per barrel against ICE Brent Futures, while Iranian Heavy crude faces a larger discount of $3.5 per barrel.
Despite facing barriers, Iranian crude deliveries showed significant growth in February, rebounding by 89% to 1.6 million barrels per day, indicating a resilient logistics operation under challenging conditions. While U.S. sanctions could further impact Iranian production, analysts predict that production may fall by around 500,000 barrels per day year-on-year by late 2025, underscoring the uncertain future of Iranian oil exports.