The Waning Waters: China's Declining Access to Iranian Crude Amid U.S. Blockade

Iran's oil exports to China have taken a hit as U.S. sanctions tighten, leading to a decline in offers and a rise in prices. The blockade has affected shipments and increased uncertainty around supply, compelling Chinese refiners to seek alternatives like Brazilian and Iraqi crude.

Iran's crude oil offers to Chinese buyers have seen a significant decline, with prices surging this week due to the U.S. blockade that has hampered Tehran's shipments, sources in the industry report amid looming threats of further sanctions from Washington.

The blockade was re-imposed on July 13, after a peace deal fell through, aiming to stifle Iran's primary oil sales, already affected by earlier war-related damages to its energy infrastructure. Consequently, offers for September and October deliveries have decreased compared to those in July and August as pre-loaded barrels are already sold, insiders reveal.

The export situation has worsened since mid-July, with no supertankers carrying Iranian crude recorded crossing the Strait of Hormuz, according to data from ship-tracker Kpler. This has pressured independent refiners, or 'teapots', in China’s Shandong province, to reflect on their crucial feedstock supply, prompting some to explore Brazilian and Iraqi oil as alternatives.