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

Reuters reported, citing informed sources, that the Islamic Republic of Iran is attempting to retrieve 25 million barrels of oil from China, valued at $1.7 billion, which has been stranded in Chinese ports for six years due to U.S. sanctions. The report was based on 'three Iranian sources' and 'one Chinese source.' Analysts believe that Donald Trump, the elected President of the United States, who is set to return to the White House on January 21, will intensify sanctions against Iran's oil exports, aiming to limit Tehran's revenue. China claims it does not recognize unilateral sanctions and has purchased about 90% of Iran's oil exports at a discount in recent years, saving billions of dollars for its refineries. However, the stranded oil in Chinese ports, valued at $1.75 billion at current prices, highlights the challenges Iran faces in selling oil even in China. The Chinese Foreign Ministry responded to Reuters regarding this oil in its ports, stating that Beijing's cooperation with Tehran is 'legitimate' but refrained from further comment. The Iranian Ministry of Oil also did not respond to Reuters' inquiries. Amid intensified Western sanctions, Iran has managed to advance its global oil trade by relying on tankers that conceal their activities. Most of the oil sold to China is registered as non-Iranian oil in Chinese ports. Two sources familiar with the matter told Reuters that the National Iranian Oil Company registered the stranded oil as Iranian oil using exemptions granted by Mr. Trump to Chinese ports. According to these sources, the National Iranian Oil Company stored the oil in Dalian and Zhoushan ports in eastern China in tanks it had rented. Renting these tanks allowed the National Iranian Oil Company more flexibility to sell oil in China or send it to other buyers in the region. In early 2019, the Trump administration did not renew temporary exemptions for several countries from Iran's oil sanctions. These exemptions were granted to allow eight countries—Taiwan, Japan, India, South Korea, China, Turkey, Italy, and Greece—to find alternative suppliers to Iran and to prevent a sudden spike in oil prices when sanctions against the Islamic Republic began. Three sources also told Reuters that since then, the stranded oil in China has not found buyers, and Chinese customs has not cleared it, resulting in these shipments remaining in tanks all these years. One of these three Iranian sources said that the oil tanks in Dalian are managed by 'PDA Energy,' which has demanded over $450 million from the Islamic Republic for storage since 2018. In Zhoushan, the tanks are managed by the private storage operator 'CGNPC.' One Iranian source told Reuters that negotiations between Iranian officials and these Chinese companies regarding the payment of outstanding fees and other conditions for the release of oil have become more urgent in recent weeks due to Tehran's concerns over renewed sanctions by Trump. This source stated that Abbas Araqchi, Iran's Foreign Minister, made progress regarding the stranded oil in Chinese ports during his visit to Beijing, but did not provide further details. An Iranian source experienced in Iran's oil exports and Chinese customs told Reuters that the Islamic Republic must load the oil from the tanks onto ships, then transfer it at sea from ship to ship, and rewrite its documents to be able to sell it. On Tuesday, January 8, Reuters also reported, citing 'informed trade sources,' that the Shandong port group has banned U.S.-sanctioned tankers from operating in the ports of this eastern province of China. Data from ship-tracking firm 'Kpler' indicates that ports in this province imported about 1.74 million barrels of oil daily from Iran, Russia, and Venezuela last year, accounting for about 17% of China's oil imports. According to these trade sources, if this ban is enforced, transportation costs for independent refineries in Shandong, the main buyers of discounted sanctioned crude from these three countries, will increase. Washington imposed further sanctions last month on companies and shadow fleets trading Iranian oil. The ban on U.S.-sanctioned tankers entering ports in Shandong Province, China.