Reuters has reported that Iran is attempting to release 25 million barrels of its oil, which has been stranded in Chinese ports for six years due to U.S. sanctions.
According to “informed sources” in China and Iran cited by Reuters, these oil shipments are now valued at approximately $1.75 billion and are stored in leased tanks at the ports of Dalian and Zhoushan.
This oil shipment was seized in China during Donald Trump’s first presidency when oil sanctions were imposed. Analysts predict that in Trump’s second term, which begins on January 20, sanctions on Iran’s oil exports will be further intensified.
China has repeatedly stated that it does not recognize unilateral sanctions and has sourced 90% of its oil from Iran in recent years with significant discounts. However, the stranding of some Iranian oil shipments in Chinese ports highlights Iran’s challenges in selling oil, even to an ally like China.
Over the past four years, despite some of the toughest Western sanctions against Iran, the Iranian regime has maintained a thriving oil trade. This trade largely relies on a “ghost fleet” of tankers that turn off their automatic identification systems, conduct ship-to-ship transfers in the open ocean, rebrand oil, and ultimately deliver it to Chinese ports.
In September and October, the United States sanctioned dozens of tankers in the “ghost fleet,” causing Iran’s oil exports to China to drop below 1.3 million barrels per day in November and December—550,000 barrels lower than the September levels.
Reuters reports that most Iranian oil sold to China is rebranded along the way and arrives at Chinese ports as non-Iranian oil. However, the particular shipment that has remained stranded in Chinese ports since 2018 was officially documented as Iranian oil. It arrived in China when the Trump administration had issued waivers allowing the sale of Iranian oil to China.
When Trump revoked these waivers in 2019, the Iranian oil stored in tanks at the ports of Dalian and Zhoushan was left without buyers and got stuck in Chinese customs.
One of the three Iranian sources told Reuters that the cost of storing this amount of Iranian oil at the port of Dalian in China has exceeded $450 million.
Reuters, citing an Iranian source familiar with oil exports from Iran and Chinese customs procedures, reported that Iran will likely have to reload the oil from Chinese storage tanks onto its own ships, conduct ship-to-ship transfers at sea, and sell it under falsified documents as non-Iranian oil.
In recent weeks, as the start of Donald Trump’s second presidential term approaches, negotiations between Iranian and Chinese officials have intensified regarding the payment of storage fees and other conditions for releasing Iranian oil stored in China.
Meanwhile, the Shandong Port Group, which operates China’s largest oil terminals receiving crude from Iran, Russia, and Venezuela, has banned the entry of U.S.-sanctioned oil tankers amid a sharp decline in Iranian oil exports over the past two months.
The majority of Iran’s oil shipments are delivered to Chinese refineries through this port.
The sanctions imposed on Iran during Trump’s previous presidency reduced Iran’s daily oil exports from 2.5 million barrels to less than 350,000 barrels.
