Shrinking Iranian Oil Supply for China Highlights Effectiveness of U.S. Blockade
The volumes of Iranian oil available to Chinese buyers are rapidly shrinking, signaling the effectiveness of the U.S. blockade on Iran's ports in choking off Tehran's revenues.
Around 40 million barrels of Iranian crude are currently anchored on vessels near Singapore, a heavily utilized area for ship-to-ship oil transfers en route to China, according to the data analytics firm Kpler. However, only 10% of this volume—equivalent to the cargo of two Very Large Crude Carriers (VLCCs)—has yet to find buyers, according to the market data firm, citing traders.
Iranian Oil Prices Surge Amid Supply Squeeze
The United States renewed its blockade in mid-July, leading to an increasing number of Iranian vessels being stranded. According to Kpler, at least 41 million barrels of oil are now stuck on ships within the Arabian Gulf, alongside 22 empty tankers.
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The repercussions are not limited to Tehran; they also extend to China's independent refiners, commonly known as "teapots," which are among the most prominent buyers of Iranian crude.
"Buyers may find almost no new Iranian supplies available for delivery from late September onward," said Muyu Xu, senior crude oil analyst at Kpler. She added that Iran is now able to raise its prices given the near absence of available supply.
This scarcity is already being reflected in pricing. Offers for Iranian Light crude have surged this week to a premium of up to $3.50 per barrel over ICE Brent crude, after being offered at a discount of nearly $3.50 just a week ago, according to Kpler.
