- Sanctioned VLCCs carrying 6.08 million barrels of Iranian crude oil to Shandong province may shut down their engines.
- Buyers may resort to non-sanctioned carriers or alternate private ports.
- Shandong Port Group remains cautious amid rising trade tensions and stricter sanctions compliance, while teapot refineries seek safer alternatives.
Amid escalating trade tensions and tighter sanctions compliance, several blocklisted Very Large Crude Carriers (VLCCs) transporting Iranian crude oil to China are facing operational roadblocks. The Shandong Port Group’s decision to blocklist sanctioned vessels reflects China’s cautious approach to navigating geopolitical challenges while maintaining its vital oil imports, reports SP Global.
Sanctioned VLCCs in Focus
The Salvia, Bendigo, and Carnatic, formerly known as Hasna, Hilda I, and Seastar III, respectively, have been flagged for carrying Iranian crude transferred ship-to-ship in Malaysian waters.
These vessels are blocklisted by the Shandong Port Group. They face operational hurdles en route to Shandong, with scheduled mid-January deliveries potentially delayed or rerouted.
Navigating blocklist Challenges
Sanctioned vessels now face limited options, with buyers exploring non-sanctioned carriers or other private ports like Jingang and Haiye to facilitate discharge.
This situation has heightened the demand for non-sanctioned vessels. It drives up freight rates and increases risks for carriers willing to navigate this sensitive trade route.
Shandong Port Group’s Strategic Stance
The Shandong Port Group, operating several key ports in the province, handled 90% of China’s Iranian oil deliveries in 2024.
However, under pressure from US sanctions, the group has prioritized operational stability. It views petroleum transported by sanctioned vessels as a minor fraction of its overall throughput.
Rising Trade Tensions
With US-China trade tensions at a high and a new US president assuming office, Shandong Port Group has adopted a cautious stance.
The move underscores the complex balancing act between maintaining trade flows and adhering to international compliance norms.
Impact on Teapot Refineries
Independent refineries, or teapots, in Shandong, heavily reliant on Iranian crude, are now opting for non-sanctioned vessels to avoid disruptions.
This shift raises freight costs. It also highlights the precarious position of smaller players amid tightening sanctions.
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Source: SP Global
