Iran's Efforts to Retrieve 25 Million Barrels of Stalled Oil in Chinese Ports

Reuters reports that Iran is trying to free 25 million barrels of oil that have been stranded in Chinese ports for six years due to U.S. sanctions. According to 'informed sources' in China and Iran, these oil shipments are now valued at approximately $1.75 billion and are stored in rented tanks at the ports of Dalian and Zhoushan. This oil was seized during the first term of Donald Trump's presidency when U.S. oil sanctions were imposed on China. Analysts expect that Trump will intensify sanctions against Iranian oil exports again when he begins his second term on January 20. China has repeatedly stated that it does not recognize unilateral sanctions and has sourced 90% of its oil from Iran at significant discounts in recent years; however, the stalling of some Iranian oil shipments in Chinese ports indicates numerous challenges Iran faces in selling oil, even to an ally like China. Over the past four years, despite some of the toughest Western sanctions against Iran, the Islamic Republic has established a thriving oil trade, largely relying on a 'ghost fleet' of tankers that turn off their automatic identification systems and engage in transshipment operations in the oceans, changing the branding of oil, and ultimately delivering their oil to Chinese ports. The major Chinese port has banned the entry of sanctioned tankers carrying Iranian oil. The United States sanctioned dozens of 'ghost fleet' tankers in October and September, and Iranian oil exports to China fell to less than 1.3 million barrels in November and December, which is 550,000 barrels less than the September level. Reuters reported that most Iranian oil sold to China is rebranded along the way to Chinese ports and arrives as non-Iranian oil. However, the shipment in question, which has been stranded in Chinese ports since 2018, was registered as Iranian oil and arrived at Chinese ports when Trump's first administration issued waivers for the sale of Iranian oil to China. When Trump revoked these waivers in 2019, the Iranian oil remaining in the tanks at Dalian and Zhoushan found no buyers and got stuck in Chinese customs. One of three Iranian sources told Reuters that the storage cost for this volume of Iranian oil in Dalian port has exceeded $450 million. Reuters also reported, citing an Iranian source experienced in oil exports from Iran and Chinese customs procedures, that Iran will have to load oil from Chinese tanks onto its ships and then conduct ship-to-ship transfers at sea, selling it as non-Iranian oil through documentation. In recent weeks, as Trump's second presidential term approaches, negotiations between Iranian and Chinese officials regarding storage costs and other conditions for releasing Iranian oil in China have intensified. On the other hand, the Shandong Ports Group, the largest oil terminal receiving oil from Iran, Russia, and Venezuela, has simultaneously banned the entry of U.S.-sanctioned tankers amid a significant drop in Iranian oil exports over the past two months. The majority of Iran's oil is delivered to Chinese refineries through this port. The issue of falling Iranian oil exports comes as Donald Trump, the U.S. president-elect, is set to enter the White House in less than two weeks, and it is expected that he will revive the 'maximum pressure' policy against the Islamic Republic. The sanctions imposed against Iran during his previous presidency reduced the Islamic Republic's daily oil exports from 2.5 million barrels to less than 350,000 barrels. After Joe Biden's administration took office, Iran increased its oil exports each year, averaging 1.55 million barrels last year.