The amount of Iranian oil that’s readily available to Chinese buyers is rapidly running out, showing the effectiveness of the US blockade of the country’s ports at choking off revenue to Tehran.
About 40 million barrels of the Islamic Republic’s crude is sitting on vessels near Singapore, in an area that’s a popular ship-to-ship transfer location for oil heading to China, according to Kpler. However, only 10% of that, or two supertanker cargoes, remains unsold, the data intelligence firm said, citing market participants.
The US renewed its blockade in mid-July, and a growing flotilla of Iranian ships are now trapped. At least 41 million barrels of oil is now stuck on vessels inside the Persian Gulf, as are 22 empty tankers, according to Kpler. That’s a blow not only to Tehran, but also to China’s independent refiners, or teapots, the main customers for the crude.
‘Buyers could face virtually no new Iranian supplies available for late-September delivery onwards,’ said Muyu Xu, a senior crude analyst at Kpler. The Iranians can now charge more, given that almost no supply is available, she said.
The squeeze is already showing up in prices. Offers for the Iranian Light grade have risen to as much as $3.50 a barrel above ICE Brent this week, compared with a discount of around $3.50 just a week earlier, Kpler said.
The US is now preparing to ramp up economic measures against Tehran, with Treasury Secretary Scott Bessent vowing to hit the country with the ‘greatest coordinated economic isolation in the history of the world.’ While details have not yet been released, Chinese ports or refiners that take Iranian oil could be targeted, which would risk worsening the rift between Washington and Beijing.
The hoard of Iranian oil floating off Singapore had previously been growing due to weak demand in China. The recent purchases suggest a possible pickup in consumption by the teapots, who may now have to seek alternative supplies or cut run rates from October.