- China’s crude oil imports dropped to a four-month low in May, with shipments from the Middle East Gulf and Iran falling sharply.
- The European Union proposes its 18th sanctions package targeting indirect Russian oil imports, financial institutions, and shadow fleet tankers.
- Japan imports Russian crude for the first time in two years under a special energy security waiver.
China’s crude oil imports fell to 9.54 million barrels per day (b/d) in May 2025, marking a 14% drop from April’s 11.1m b/d, according to Vortexa. This is the lowest level recorded in the past four months.
Shipments from the Middle East Gulf (MEG) were significantly impacted, dropping to 4.85m b/d, down 15% from April and the lowest since June 2022. The reduction was largely due to declining volumes from key producers:
- Iran: -400k b/d
- UAE: -188k b/d
- Iraq: -183k b/d
- Saudi Arabia: -153k b/d
These cuts led to a 7.3% decrease in VLCC tonne miles, which fell to 475 billion tonne miles.
The drop in Iranian exports is attributed to tightened US sanctions, which have disrupted Tehran’s export routes. Simultaneously, Chinese independent refiners are operating at near-record-low run rates due to seasonal maintenance, ESPO pipeline work, and high inventories.
While Iranian crude was previously favored for its low cost, Russian grades such as Sokol and Novy Port are now more competitive. Still, imports from Russia also fell to 1.19m b/d, down from April’s 1.41m b/d. Notably, China imported no crude from the US in May, compared to 107k b/d in April.
EU Proposes 18th Sanctions Package Against Russia
The European Commission has proposed a new sanctions package focused on Russia’s energy revenue and financial network. The proposals, likely to be approved by the end of June, include:
- A ban on refined petroleum products made from Russian crude oil, closing the loophole through which countries like India and Turkey refine discounted Russian crude and export the products to the EU. The two countries imported around 2m b/d of Russian crude and exported 474k b/d of refined products to the EU so far in 2025.
- Sanctions on 22 Russian banks, expanding beyond SWIFT exclusion to full transaction bans.
- A ban on all transactions related to Nord Stream pipelines.
- Sanctions against 77 additional Russian-linked vessels, bringing the total to over 400 tankers, many of which operate in the so-called shadow fleet.
- Lowering the G7 price cap from $60/bbl to €45/bbl to tighten restrictions on Russian oil income.
Japan Resumes Russian Crude Imports via Sanctioned Tanker
Japanese refiner Taiyo Oil has resumed imports of Russian crude for the first time in over two years. The cargo was delivered by the sanctioned Aframax tanker Voyager (113,000 DWT), under a special waiver granted by Japanese authorities.
Formerly known as the Vernadsky Prospect, the Voyager is linked to Sovcomflot and now operated by Starfish Ship Management, a Dubai-based company. The vessel loaded 600,000 barrels of Sakhalin crude on May 25 and discharged at Kikuma, Japan earlier this week.
This shipment was authorized under a national security exemption as Japan maintains its strategic stake in the Sakhalin-2 project, which remains critical to its energy supply. Waivers issued by US and EU authorities for these imports are valid through end of June and may be extended. A spokesperson from Taiyo Oil confirmed the procurement was made at the request of Japan’s Ministry of Economy, Trade and Industry. Before the war in Ukraine, Japan imported four Sakhalin cargoes per month on average.
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Source: Breakwave Advisors
