January 28, 2025

Welcome to the Wild South: Iranian oil shipments find new discharge hubs

Just as ports in China’s Shandong province, home to dozens of teapot refiners, are still awaiting clarity on whether they can receive tankers added to the OFAC sanctions list, Iranian oil sellers have already found new hubs to offload their sanctioned cargo—about 1,500 km south of Shandong.

Market & Trading Calls

  • Bullish on China’s Iranian oil imports, as ports beyond Shandong province seem open to accepting cargoes from sanctioned vessels.
  • Bearish on Iranian oil prices, with additional supplies expected both from Iran and the stranded storage in Dalian.

Ever since the state-owned Shandong Port Group, which operates major terminals in Qingdao, Rizhao, Yantai, and Dongying, issued a preemptive ban three weeks ago on receiving US-sanctioned tankers, no vessels listed by OFAC carrying Iranian oil have successfully offloaded at its facilities. While it remains unclear how long the Shandong Port Group will strictly enforce the ban, oil traders have explored a new workaround—adding yet another voyage to an already complex journey.

As of January 27, two Iranian crude carriers, Nichola and Dorena, had docked at Huizhou Port in southern China, with the latter believed to have completed offloading. Neither tanker had previously been seen calling at Huizhou Port as Iranian oil haulers. A market insider told Kpler that all oil storage tanks at Huizhou Port have been rented out by Chinese traders, likely in preparation for receiving more Iranian cargoes from sanctioned tankers. Traders will then hire non-sanctioned tankers to transport Iranian oil to buyers in Shandong, inevitably adding a few dollars to the cost—either absorbed by Iranian sellers or passed on to Shandong buyers.

Similar to Huizhou, ports in China's eastern Zhejiang province appear ready to accept sanctioned vessels rejected by Shandong. At least three tankers, Carnatic, Clio, and Oxis, which had previously signalled their intent to head to Shandong ports have now changed their destination to Ningbo/Zhoushan in Zhejiang. Meanwhile, the VLCC Bendigo changed its destination from Shandong to Hainan in mid-January but remains anchored off the island.

Despite creative approaches to delivering cargoes to China, Iranian crude oil arrivals are estimated to decline by 277 kbd m/m to 1.1 Mbd in January, as the shipping capacity bottleneck caused by the latest round of US sanctions on Iranian oil vessels remains not fully resolved. For the same reason, Iranian oil floating storage has surged to a 27-week high of 20.68 Mbbls, with over 70% anchored in Malaysian and Singaporean waters.

Iranian oil floating storage by current sea, Mbbls
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Source: Kpler

In addition to addressing shipment issues to bring fresh Iranian exports to China, Iranian oil sellers are also scrambling to mobilize vessels to move stranded Iranian oil stored in Dalian. Kpler has identified three tankers—, Star ForestCh Billion, and —that are likely engaged in transporting Iranian oil from Dalian. MadestarThe cargoes carried by Star Forest and Madestar appear to be heading south, awaiting further orders, while the Aframax tanker Ch Billion may attempt to discharge directly at Shandong.

Whether it comes as a surprise or not that U.S. President Donald Trump did not announce stricter sanctions on Iranian oil trade in his first week in office, it has given Iranian oil sellers time to reorganize their fleet and allowed Chinese teapots to secure more discounted barrels to sustain their operations. Furthermore, with the bold exploration of new hubs to receive sanctioned tankers, Russian oil traders could take a lesson from their Iranian counterparts.

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