Offers of Iranian crude to Chinese buyers have declined sharply and prices have risen as the U.S. blockade restricts Tehran’s oil shipments, raising concerns over further sanctions against Iranian oil buyers.
The number of Iranian cargoes offered for September and October delivery has fallen from July and August levels as barrels already at sea have been sold. Kpler data also shows no visible supertanker crossings of the Strait of Hormuz carrying Iranian crude since mid-July, although tracking is complicated by vessels switching off their transponders.
Iranian crude in floating storage outside the blockade zone has dropped to around 80 million barrels, from approximately 105 million barrels before the blockade was reinstated. Kpler estimates about 40 million barrels are currently aboard vessels near Malaysia and Singapore, most of which have already been committed to buyers.
The supply squeeze has pushed Iranian Light crude from a discount of around $3/bbl to a premium of about $2/bbl over ICE Brent in recent days.
The disruption is particularly significant for China’s independent “teapot” refiners in Shandong, which account for around 20% of China’s refining capacity and are major buyers of sanctioned Iranian oil. Some refiners have begun seeking alternatives, including Brazilian Lapa and Iraq’s Basrah crude.
China’s imports of Iranian oil have also weakened. Kpler estimates imports fell to 785,000 bpd in June, rose to 823,000 bpd in July, but dropped to around 534,000 bpd in August so far, compared with an average of 1.4 million bpd in 2025.
Meanwhile, Washington’s threat of tougher sanctions has increased uncertainty for Chinese buyers. China purchases more than 80% of Iran’s seaborne oil, according to Kpler, making the availability of Iranian crude increasingly dependent on the ability of Chinese refiners to navigate U.S. sanctions risks.