Iranian oil offers to Chinese buyers fall as US blockade bites

Iranian oil sales to Chinese buyers have diminished as the US blockade of Iranian shipping and ports intensified, according to trade sources. The US reimposed the blockade on July 13, following the breakdown of a deal aimed at halting the war between Iran and the US, in an effort to cut off Iran's oil sales, Tehran's primary source of hard currency.

This has led to a decline in the number of offers for Iranian oil cargoes to China for September and October delivery, compared to previous months. Iran's oil exports have been affected by the blockade, with no visible crossings of the Strait of Hormuz by supertankers carrying Iranian crude. Some Iranian crude, typically sold at discounts, is being offered at premiums to ICE Brent futures.

This shift is a significant change, as Iranian crude was earlier being offered at a discount. The availability of Iranian oil in floating storage outside the blockade zone has also decreased, with only about 80 million barrels remaining, down from about 105 million barrels before the blockade. Chinese teapots, independent refiners located in China's eastern province of Shandong, are now looking beyond Russia and Iran for their oil needs, as their usual Iranian supply is uncertain.