- Iranian Oil Hits Record 1.8mbd as Shandong Leads the Charge.
- OFAC Sanctions Spark Refiners’ Rush to Stockpile Iranian Crude.
- Shandong Teapots Flex Muscle with Record Inventories.
China’s seaborne crude oil imports rose to 10.6 million barrels per day (mbd) in March, the highest since October 2023. The growth was led by record-level Iranian crude deliveries into the Shandong region, reports Break Wave Advisors.
Record Iranian Crude Imports Drive Stockpiling
Iranian crude imports into China reached an all-time high of 1.8 mbd in March. More than 1.5 mbd were simply absorbed by Shandong province—a 50% rise from the 2024 average. The influx pushed onshore inventories 20 million barrels higher, the most rapid monthly stock build on record for the area.
Sanctions Drive Urgent Buying
New OFAC sanctions on additional Iran-linked tankers have fueled fears of future supply disruption. Chinese refiners responded by scrambling to lock in Iranian barrels in March, speeding up stockpiling ahead of possible supply threats.
Teapots Gain Bargaining Power
With inventories now higher, “teapots” independent refiners in Shandong have more bargaining power. They’ve reduced further purchases and are demanding deeper discounts on the next cargoes. Despite imports possibly weakening in April, demand for discounted feedstock is firm, underpinned by better refining margins from a decline in global benchmark prices.
Floating Storage Remains Stable
Iranian crude in floating storage off the South China Sea was still close to 30 million barrels in late March—down from the beginning of the month at 33 million. The record close March export level of nearly 1.8 mbd underscored Iran’s desperation to deliver barrels to the east before fresh disruptions.
Russian Crude Flows Rebound—Arctic Grades Tackle Shandong
China’s seaborne Russian crude imports also climbed to 1.3 mbd in March, in line with the 2024 average. The uptick was paced by Far East grades such as Sokol and Sakhalin Blend, which hit a 12-month peak as stranded January-February cargos were removed at discounts.
Arctic Crude Aboard Sanctioned Tankers Resurfaces
While Russian long-haul imports such as Urals and Arctic Grades had fallen after January because of sanctions and a tanker shortage, some of the Arctic crude on sanctioned ships is now entering the South China Sea in search of buyers among price-sensitive teapots.
Blurring Lines: Iranian-Linked VLCC Now Carrying Russian Oil
In a significant development, one of the unsanctioned VLCCs that had been recently engaged in Iranian ship-to-ship transfers is now on its way to Shandong with Russian Arctic crude. The cargo was loaded through two STS operations, reflecting that Russian barrels are available at even weaker prices than Iranians, luring refiners who value price more than origin.
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Source: Break Wave Advisors
