09 January
2025
Shandong Port Group has barred tankers under US sanctions from entering its ports in the eastern Chinese province, home to many independent refiners that are the biggest importers of oil from countries under US embargoes, three traders said.
The province imported about 1.74 million barrels per day (bpd) of oil from Iran, Russia and Venezuela last year, accounting for about 17% of China's imports, vessel tracking data from Kpler showed.
If the ban goes into effect, traders added that the ban would increase shipping costs for independent refiners in Shandong, the main buyers of concessional, sanctioned crude from the three countries.
Last month, Washington introduced new sanctions against companies and a shadow fleet that deal with Iranian oil. President-elect Donald Trump, who will take office on January 20, is expected to tighten sanctions on Iran as he did during his first administration.
The ban could slow imports to China, the world's biggest oil importer, traders said.
The Shandong port announcement issued on Monday was obtained from two traders and confirmed by a third. It prohibits ports from docking, unloading, or providing vessel services to vessels on the Office of Foreign Assets Control list, which is administered by the U.S. Treasury Department.
The port of Shandong controls major ports on China's east coast, including Qingdao, Zhizhao and Yantai, which are the main terminals for imports of sanctioned oil.
The Port of Shandong did not return calls or an email from Reuters seeking comment.
In a second report on Tuesday, which was also seen by Reuters, the port of Shandong said it expected the shipping ban to have limited impact on independent refiners because most of the sanctioned oil is carried on non-sanctioned tankers.
The ban comes after the Sanctioned Eliza II tanker unloaded at the port of Yantai in early January, the report said.
In December, eight very large oil vessels, with a capacity of two million barrels each, unloaded mostly Iranian oil in Shandong, according to estimates by tanker tracker Vortex.
Among the vessels are Phonix, Vigor, Quinn and Divine, all of which have been sanctioned by the US Treasury Department.
The active shadow fleet carrying Iranian, Russian and Venezuelan oil is estimated at about 669 tankers, said Michelle Wiese Bockmann, principal analyst at maritime data group Lloyd's List Intelligence.
Of that total, 250-300 tankers were typically involved in the transportation of Russian oil, excluding Iran's largest operator NITC and Russia's leading tanker group Sovkomflot, she added.
Between October and December, the U.S. Treasury Department sanctioned 35 tankers it said were part of Iran's "ghost fleet," excluding vessels operated by NITC. At the beginning of 2024, Washington imposed separate sanctions on Sovcomflot.
Sources told Reuters this week that the Biden administration plans to impose sanctions on more than 100 tankers carrying Russian oil.
A shift to unauthorized vessels could increase costs for refiners in Shandong, which are struggling with low margins and sluggish demand, traders said.
Shares of top tanker operator Frontline jumped more than 9% on Tuesday after news of a port ban with an expected reduction in tanker availability.
The U.S. Defense Department said on Monday it had added China's largest shipping company COSCO to a list of companies it said are working with the Chinese military, which could curb the use of COSCO tankers by charterers and increase the tightness of chartered vessels, shipping analysts said on Tuesday.
Last month, the price of Iranian crude oil sold to China hit its highest level in years as new US sanctions tightened transport options and raised logistics costs.
Iran's floating crude storage rose to a 12-month high of 20 million barrels, and Iran's export fleet is relatively stretched with high exports per vessel. Analysts at Goldman Sachs said last week that this was historically linked to further declines in crude oil exports from Iran.
The investment bank expects Iran's oil supply to fall by 300,000 bpd to 3.25 million bpd by the second quarter of 2025.
Russian oil prices, which have risen to near two-year highs, may remain supported as the Biden administration plans to impose additional sanctions on Moscow over its war against Ukraine.