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Offers of Iranian crude to Chinese buyers have declined for September and October deliveries while prices have jumped to premiums as the US blockade reimposed on July 13 restricts Tehran’s shipments, Reuters reported on August 21 citing four trade sources familiar with the matter. The sources indicated that the reduced number of cargoes follows the sale of barrels already loaded on vessels, leaving fewer options for independent refiners in China’s Shandong province that rely heavily on discounted Iranian feedstock. Those refiners, known as teapots, represent about one fifth of national refining capacity and have faced increasing challenges sourcing alternatives amid the supply squeeze.
The US reinstated its blockade of Iranian ports and shipping on July 13 after a temporary deal to halt hostilities collapsed, compounding damage from earlier strikes on energy infrastructure, a Reuters assessment found. Iran’s oil exports have fallen since mid July with Kpler ship tracking data showing no visible supertanker crossings of the Strait of Hormuz in that period although many vessels disable transponders. The development threatens a key revenue stream for Tehran that averaged 1.4 million barrels per day in shipments to China alone last year according to the same data provider.
Floating storage of Iranian crude outside the blockade area has dropped to around 80 million barrels from 105 million before the measure was reinstated, Kpler figures show. Two trade sources estimated that only 30 million barrels remained in Asian waters, roughly half the typical volume, while Kpler senior analyst Muyu Xu noted in a LinkedIn post that 40 million barrels sit in Malaysian waters east of Singapore with most already committed. “This suggests buyers could face virtually no new Iranian supplies available for late September delivery onwards since no laden Iranian tankers have so far managed to break through the US blockade,” Xu wrote.
Some Iranian crude typically sold at discounts has shifted to premiums of about $2 per barrel over ICE Brent futures, a sharp change from a $3 discount observed a month earlier, three of the trade sources told Reuters. With limited Iranian availability one teapot refiner purchased Brazilian Lapa crude this week while others turned to Iraqi Basrah grades. “Given the thin Iranian availability amid the US blockade, Chinese teapots are now looking beyond Russia and Iran,” Sun Jianan, senior oil analyst at Energy Aspects, said.
China’s imports of Iranian oil fell to 785,000 barrels per day in June according to provisional Kpler data, the lowest level since February 2023, before rising modestly to an estimated 823,000 barrels per day in July. Intake has since dropped further to 534,000 barrels per day so far in August while Beijing continues to reject unilateral sanctions as a means to resolve the conflict, a Chinese foreign ministry spokesperson stated on Thursday. The Asian nation purchases more than 80 percent of Iran’s exported crude based on 2025 Kpler statistics.
US Treasury Secretary Scott Bessent warned on Thursday of “the toughest sanctions in history” against Iran with further details expected on Monday in an effort to reopen the Strait of Hormuz and end the conflict, Reuters reported. A source at one teapot refinery indicated that while previous sanctions had not fully deterred purchases, the new measures have placed buyers on heightened alert. The current situation echoes 2019 when Iranian exports plunged to 100,000 barrels per day in July after intensified US enforcement prompted China to temporarily suspend imports, Kpler historical data shows.
