Iran’s oil exports to China fall to 17-month low amid US pressure and weaker demand

Iran’s oil exports and deliveries to China fell to their lowest level in 17 months last month, according to data from international tanker-tracking firms, amid increased US pressure on Iranian shipments and weakening demand from Chinese refineries.

The data showed that Iran’s daily oil deliveries to China dropped to approximately 1.1 million barrels per day during the month.

At the same time, oil loading at Iranian ports reportedly declined sharply to around 300,000 barrels per day following the start of what has been described as increased US naval pressure on the Islamic Republic. Iran’s oil exports to other foreign markets were estimated at between 120,000 and 260,000 barrels per day.

The decline marks a significant slowdown compared with last year, when Iran’s crude oil exports averaged around 1.6 million barrels per day. Exports had also approached the two million barrels per day mark during the early months of the current year.

The reduction in exports has forced Tehran to rely more heavily on floating oil storage in Asian waters to maintain supplies to Chinese customers.

According to estimates by energy intelligence firm Kpler, Iranian crude oil stored aboard tankers in East Asia has fallen from approximately 130 million barrels to 79 million barrels.

Meanwhile, a Reuters report indicated that declining demand from China's independent refineries has compelled Iran to reintroduce discounts on crude oil sales.

According to the report, Iranian oil is currently being offered to Chinese buyers at discounts ranging from 50 cents to one dollar per barrel.

The discounts had largely disappeared following tensions in the Strait of Hormuz, which contributed to a surge in global oil prices. During the final months of last year, discounts on Iranian crude had reportedly exceeded $10 per barrel.

Industry reports suggest that independent Chinese refineries, traditionally the largest buyers of Iranian oil, have reduced operating rates due to elevated global oil prices and have become less willing to purchase additional cargoes.

China’s overall crude oil imports have also declined significantly in recent months. Available statistics indicate that the country’s oil imports fell by around 20 percent in March and April and dropped by nearly 50 percent in May.

Kpler data further showed that China’s imports of Iranian crude oil declined by 18 percent in May compared with April and were down 36 percent compared with March, underscoring the combined impact of softer demand and increased pressure on Iranian oil exports.