Some 20 million barrels of Iranian oil sitting on China’s shores in the northeast port of Dalian for the past six months now appears stranded as the United States hardens its stance on importing crude from Tehran.
Iran sent the oil to China, its biggest customer, ahead of the reintroduction of U.S. sanctions last November, as it looked for alternative storage for a backlog of crude at home.
The oil is being held in so-called bonded storage tanks at the port, which means it has yet to clear Chinese customs. Despite a six-month waiver to the start of May that allowed China to continue some Iranian imports, shipping data shows little of this oil has been moved.
Traders and refinery sources pointed to uncertainty over the terms of the waiver and said independent refiners had been unable to secure payment or insurance channels, while state refiners struggled to find vessels.
The future of the crude, worth well over $1 billion at current prices, has become even more unclear after Washington last week increased its pressure on Iran, saying it would end all sanction exemptions at the start of May.
“No responsible Chinese company with any international exposure will have anything to do with Iran oil unless they are specifically told by the Chinese government to do so,” said Tilak Doshi of oil and gas consultancy Muse, Stancil & Co in Singapore.
Iran previously stored oil in 2014 at Dalian during the last round of sanctions that was later sold to buyers in South Korea and India.
China last week formally complained to the United States over the unilateral Iran sanctions, but U.S. officials have said Washington is not considering a further short-term waiver or a wind-down period.