- Iranian Crude Imports Reach Five-Month High Amid STS Transfers.
- Russian Crude Shipments Face Uncertainty as State-Owned Refiners Cut Purchases.
- Floating Sokol Cargoes Await Orders Off Shandong’s Coast.
China’s crude imports returned in February after the disruption faced in January. The revival was mainly contributed by the resumption of cargo discharges at Shandong after weeks of suspension due to the shipping ban imposed by Shandong Port Group and U.S. OFAC sanctions on more than 150 tankers for Russian and Iranian trades, reports Break Wave Advisors.
Total Seaborne Crude
Total seaborne crude imports totalled 9.6 million barrels per day (mbd), up 7% from January. Imports were still 4% lower than the same period last year, though, as poor demand from Shandong’s independent refiners continued to bear down on the market.
Iranian Crude Shipments Reach Five-Month High
Iranian crude imports jumped to about 1.5 mbd in February, the strongest level since October 2024. The growth came mainly from stranded cargoes redirected through ship-to-ship (STS) transfers onto non-sanctioned tankers around Chinese waters. Iranian crude flows are set to fall in March even after this boost as teapot refiners’ demand weakened.
Russian Crude Supply Adjustments and Refinery Preference Shifts
After the January OFAC sanctions, loadings of Russia’s Far East ESPO Blend crude were sustained by a rapid build-up of a non-sanctioned tanker fleet. Additional cargoes loaded in February went to Shandong and Jiangsu, primarily to independent refiners. Yet in January, these refiners had reduced their processing rates rather than looking for alternative sources of crude as a result of uncertainty over ESPO supply.
Meanwhile, Chinese state refiners have acted more conservatively towards Russian crude. Even as transported on non-sanctioned ships, purchases of ESPO Blend were held back. According to market sources, some of the state-run refiners halted Russian crude entirely in March following the cut-back in February volumes. This same conservative attitude also subdued demand for other Russian grades, such as Urals and Arctic crude.
Floating Cargoes and Likely Shift to Middle Eastern Crude
January-loaded Far East Sokol’s cargoes sent on to a non-sanctioned VLCC through STS in Russia’s Far East still float offshore Shandong, waiting for orders to discharge. Chinese oil majors imported Russian Urals and Arctic crude 230,000 barrels per day (kbd) in average monthly amounts in 2024. An outright move away from Russian crude would generate extra demand for three to four VLCCs a month from the Middle East or Atlantic Basin, although its influence on general VLCC market dynamics is likely to be minimal.
Product Exports Ready to Recover, but Quotas Still a Barrier
China’s exports of clean fuel are set to increase from March as refining margins strengthen and domestic demand slows after the holiday travel period. Nevertheless, the magnitude of this recovery will be constrained by tight export quotas, keeping in check the possibility of major growth in shipments of refined products.
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Source: Break Wave Advisors
