Iran to Recover 25 Million Barrels of Oil Stuck in China

Iran is struggling to recover 25 million barrels of crude oil that have been stuck in China for six years. The country is now trying to reclaim the oil. The oil was stuck in Chinese ports due to sanctions imposed during Donald Trump’s first term, three Iranian and one Chinese source with knowledge of the matter confirmed the information.

According to Reuters news agency, analysts believe that Trump will tighten sanctions on Iranian oil exports again after taking office on January 20. Trump’s goal is to limit Tehran’s revenue streams, which he did during his first term in office.

China has recently been buying 90 percent of Iran’s oil exports. But it is buying this oil at below market prices, saving the country’s refineries hundreds of millions of dollars. China’s position is that it does not recognize any unilateral sanctions.

The oil stuck in Chinese ports is worth $1.75 billion at current market prices, but selling this oil even to China has now become a challenge for Iran.

Iran’s oil ministry has not commented on the matter. China’s foreign ministry has said that China’s cooperation with Iran is in accordance with the rules. They have not said anything else.

Iran continues to export its oil despite Western sanctions. It does so by using tankers that keep their movements secret. Most of the oil it sells to China is shipped to Chinese ports, with the documents showing it as non-Iranian oil.

But the oil that was stuck in China was listed on paper as Iranian oil. The oil was delivered to a Chinese port by Iran’s National Oil Company (NIOC) in October 2018. Trump then granted a special exemption under which the oil was exported, two sources told Reuters.

NIOC stored the oil in the ports of Dalian and Zhoushan in eastern China. The Iranian company had rented oil tanks at both ports. With the rented oil tanks, NIOC could sell the oil to China at will or ship it to other buyers in the region as needed.

But in 2019, Trump withdrew the exemption. That’s when Iran found itself in trouble. No buyer was found for the oil stored in China, nor did Chinese customs approve its release. As a result, the oil was stuck in the tanks, sources said.

PDA Energy operates the Dalian oil tank. They have been demanding $450 million in rent since 2018. On the other hand, CGPC operates the Zhushan tank.