The United States has expanded sanctions on the transportation of Iranian oil tankers, leading to a slowdown in the speed of Iran’s oil shipments to China, plunging the oil trade between the two countries into a crisis.
According to Bloomberg’s report on December 2, the transportation of Iranian oil to China usually involves two main parts. The sanctioned tanker or Iranian-owned tanker departs from the country’s oil terminal, then docks at a midway point in Southeast Asia, often near Malaysia. Here, a ship-to-ship transfer takes place, before another tanker transports the crude oil to China.
Currently, the U.S. sanctions have affected many ships that previously delivered goods to China. Ship tracking data compiled by Bloomberg and insiders reveal that the U.S. sanctions have forced some operators to abandon this trade segment, reducing the number of available oil tankers passing through this route. Due to the sensitivity of the matter, insiders prefer not to disclose their identities.
As a result, the amount of Iranian crude obtained by independent Chinese refineries has decreased, leading to price hikes. These refineries account for about 90% of Iran’s oil exports. This has prompted Chinese processors to seek alternative supplies of Iranian oil from Africa and other regions in the Middle East.
Operators of sanctioned ships are concerned that their vessels may be turned away by port authorities, leaving them in a predicament to find new destinations for their cargo and incurring additional costs. On October 11, the U.S. expanded sanctions to include 20 crude oil tankers, with an additional 12 added in the following weeks.
China is the world’s largest oil importer, purchasing oil from countries such as Iran, Venezuela, and Russia, all of which are heavily sanctioned by the United States.
On October 11, White House National Security Advisor Jake Sullivan stated in a release that the new sanctions also targeted the “ghost fleet,” which transports illegal Iranian oil to global buyers.
The U.S. Treasury Department stated that Iran’s oil exports are facilitated through an illegal transport service network spanning multiple jurisdictions, known as the “ghost fleet.” These service providers engage in confusion and deception to load and transport Iranian oil, selling it to buyers in Asia.