Iran’s oil export strategy heavily relies on Kharg Island, which has accounted for an impressive 96.6% of all shipments and 95.3% of terminal usage during recent times. This underscores the island’s strategic importance in Iran’s oil logistics and its critical role in maintaining export levels amid ongoing sanctions.
To enhance operational efficiency and mitigate risks, Iran predominantly uses Very Large Crude Carriers (VLCCs), which transport over 91% of its total export volume. This approach not only facilitates the movement of substantial quantities per journey but also minimizes the risk of maritime interceptions.
An overwhelming 99.8% of exported cargo consists of crude oil, revealing Iran’s strong dependence on this primary hydrocarbon asset. Regarding demand, Iran’s oil exports are largely directed towards Asia, with geopolitical alliances and logistical advantages supporting ongoing trade.
Singapore leads as the top destination, receiving 60% of import volumes, followed by China at 25% and Malaysia at 6%. Key ports in China, such as Dongjiakou and Lanshan, are vital for blending and storing Iranian crude, allowing it to re-enter global markets under different identities.
This persistent trade is further indicative of shifting geopolitical dynamics, showcasing Iran’s capability to sustain oil exports despite sanctions. However, as of March 2025, there are signs of potential weakness in this model.
Monthly exports have decreased to 9.7 million barrels, marking a 0.82% decline from February and a staggering 31% drop compared to March 2024. This downturn aligns with the U.S.’s renewed sanctions targeting Chinese-bound oil flows, focusing on maritime logistics crucial to Iran’s export strategies.
While Iran’s innovative tactics have allowed it to continue exporting oil under duress, these latest sanctions may present significant challenges. If enforcement escalates and China’s support diminishes, the recent decline could signal the start of a more restrictive period for Iranian crude exports.
In the shipping sector, crude oil freight rates have shown resilience, particularly by the end of April, with VLCC rates on the MEG–China route rising to WS68, reflecting a 6% month-on-month increase. Suezmax rates from West Africa to Europe have also strengthened, with a notable 20% increase to above WS100.
Conversely, the Aframax market reflects some volatility, with rates around WS180 showing an 8% decline week-over-week but still 30% higher than the previous month. Overall, the market dynamics indicate a mixed landscape in tanker availability and demand, with some segments showing upward trends while others face declines.
As the geopolitical situation evolves, the influence of these factors on oil exports and shipping markets will remain crucial to monitor.