The Economist, in an analytical report, examined the consequences of new U.S. sanctions on Iran’s oil exports and, referring to the potentially stricter policies of Donald Trump, predicted that China’s imports—which account for nearly all of Iran’s oil exports—would decrease by one million barrels per day. Iran’s oil exports had increased more than twelvefold in the past year compared to 2018, reaching 1.8 million barrels per day. However, even before Trump’s return to the White House, the situation had already begun to change, and this trend is expected to intensify.
The Economist reported that on November 25, the oil tanker Elva, registered under the flag of São Tomé and Príncipe, secretly loaded two million barrels of Iranian crude oil off the coast of Malaysia. Typically, the journey from this point to northeastern China, the likely destination, takes less than two weeks, but this time, it did not. On December 3, the United States blacklisted the tanker for violating sanctions. Now, six weeks have passed, and the vessel remains stranded in the same area. This is not an isolated case; since October, as the Biden administration intensified its crackdown on Iran-linked tankers, Iran’s crude oil exports to China—its primary buyer—have dropped by one-quarter, falling to 1.3 million barrels per day.
The Biden administration has increased pressure by targeting tankers transporting Iranian oil to China. Chinese ports, fearing U.S. sanctions, are now refusing to allow these tankers to dock. On January 6, the Shandong Port Group, which manages several major Chinese ports, including Qingdao and Yantai, announced a ban on docking for U.S.-sanctioned tankers. This supply reduction has led to Iranian oil being sold at a smaller discount relative to Brent crude, whereas three months ago, the discount was $6.50 per barrel. This price increase has pushed some small refineries out of the market, consequently reducing demand for Iranian oil.
Iran Races To Sell Its Stranded Oil In China To Strengthen Its Allies
The Iranian regime is attempting to replace sanctioned tankers with “clean” tankers, but the shadow fleet, which now primarily transports Russian oil, has expanded so much that there may not be enough ships left for Iran.
Trump will enter office in such a situation. He could add more tankers and traders to the blacklist. Another option under consideration by his team is to warn China that the U.S. will sanction ports receiving Iranian oil. The most aggressive option would be imposing heavy tariffs on China until Beijing halts its imports of Iranian oil.
The Economist wrote that although this measure would increase oil prices by $5 to $10 per barrel, the rise would be acceptable to American consumers while simultaneously benefiting U.S. oil producers.
The leaders of the Iranian regime have repeatedly stated that if they cannot export oil, no one else will be able to either.
