Prices for Iranian Oil Stranded at Sea Surge

Iranian oil supplies at sea are rising after Tehran ramped up exports during the interim peace deal with the United States, but sales have been slow as China's independent refiners have turned to cheaper crude from Iraq, the UAE and Qatar.

The return of U.S. sanctions this week risks leaving Tehran with more cargoes searching for buyers just as shipments arrive in Asia.

In recent weeks, independent Chinese refiners based in the eastern oil hub of Shandong, known as teapots, bought 16 million to 20.5 million barrels of crude from Qatar, Iraq and the United Arab Emirates, traders said, their largest purchases of non-sanctioned Middle Eastern oil since the conflict began.

Shandong's independent refiners account for the bulk of China's purchases of Iranian crude, as state-owned Chinese refiners have largely avoided direct imports since U.S. sanctions were reimposed in 2018.

Separately, privately owned refiner Shenghong Petrochemical bought 12 million barrels of Iraqi, Abu Dhabi and Saudi crude, according to a trader familiar with the purchases.

The wave of non-Iranian cargoes displaced demand for Iranian barrels as rival Middle Eastern producers rushed to resume exports following the reopening of the Strait of Hormuz in late June.

The rush of non-Iranian shipments, sold on a delivered basis by European traders such as Mercuria and Vitol, state majors including PetroChina International and Zhenhua Oil, and Gulf producer Abu Dhabi National Oil Co was done at discounts of $5 to $8 a barrel to ICE Brent for deliveries in August to September.

Discounts for Iranian Light crude, however, were little changed at $2-$3 a barrel to ICE Brent, according to several traders active in dealing with teapots, prompting two traders to describe the sellers as "slow" and "stubborn".

"Ironically Iranian oil becomes the most expensive," said one senior trader.

Traders said the week of funeral events that ended in Thursday's burial of slain Supreme Leader Ayatollah Ali Khamenei also slowed sales as offices were closed during the mourning period.

Traffic through the vital waterway, meanwhile, has slowed again this week after tit-for-tat attacks between the U.S. and Iran.

IRANIAN TANKERS ON THE WAY

Between June 15 and July 6, about 30 million barrels of Iranian oil were loaded, equivalent to 1.35 million barrels per day, according to tanker tracker Vortexa Analytics.

Kpler recorded an estimated 34.5 million barrels of Iranian crude transiting the Strait of Hormuz on 21 tankers from June 14 through July 10.

An estimated 60.7 million barrels, averaging 2.17 million barrels per day, were exported in February 2026, an increase of 20% from January 2026, according to analysis from U.S. advocacy group United Against Nuclear Iran.

That number dropped to 35.7 million barrels in March, averaging 1.136 million barrels per day, according to UANI.

Since the ceasefire deal announced June 14, 52 tankers have sailed with Iranian oil and petrochemicals products, carrying approximately 62 million barrels of Iranian crude oil and products, UANI analysis showed.

Of those vessels, 15 have reached the Singapore Strait and are bound for the Eastern Outer Port Limits anchorage around Malaysia's Johor area, according to UANI analysis. Three Iranian-flagged very large crude carriers have already discharged their cargoes.

"Anticipating a possible imminent resumption of the US navy blockade, Tehran shipped out no less than 10 million barrels of crude oil and fuel oil overnight," TankerTrackers.com said on Thursday in a post.

The U.S. Central Command did not immediately respond to a request for comment.

Traders expect Iranian oil sales to pick up next week, with independent refiners expecting $4-$5 discounts for August-September arriving cargoes.

China's Iranian oil imports so far this month came at 556,000 bpd, the lowest since January 2023, Kpler data showed.

(Reuters)