The United States has intensified sanctions on Iranian oil exports as part of its “maximum pressure” campaign under the Trump administration. These measures have created significant challenges for Iran’s oil trade with China, its largest buyer. However, Iranian crude continues to flow to China as traders and middlemen adjust shipping routes and increase ship-to-ship transfers, particularly near Malaysia, vessel-tracking analysts report.
Despite the growing pressure, exports from Iran to China remain steady, though the number of non-sanctioned tankers is declining. For now, the volume of oil reaching China is consistent with recent months. China has emerged as the primary beneficiary of Iran’s continued oil exports, which have largely been directed there since the U.S. withdrew from the Iranian nuclear deal in 2018 and reimposed sanctions.
China’s private refiners play a crucial role in this trade, as they purchase Iran’s sanctioned crude at discounted rates. This arrangement benefits both sides—Iran secures a market for its oil, while Chinese refiners, known as “teapots,” gain access to cheaper crude.
As part of the “maximum pressure” strategy, former President Donald Trump instructed officials to take aggressive action to reduce Iranian oil exports to zero, including sales to China. However, China does not recognize U.S. sanctions and continues to find ways to bypass restrictions.
According to Vortexa, an energy intelligence firm, Chinese ports and importers have recently implemented workarounds to maintain a steady supply of Iranian oil. Independent oil terminals outside Shandong—such as those in Dalian, Shanghai, Zhoushan, and Huizhou—have started accepting sanctioned crude, including shipments from tankers blacklisted by the U.S.
Some Iranian cargoes have also been offloaded at Shandong’s import terminal following ship-to-ship transfers. At least eight supertankers—either recently added to the “dark fleet” or idle since early 2024—have facilitated these Malaysia-to-China transfers, Vortexa analyst Emma Li reported.
In February, Iranian crude discharges into China rebounded, with shipments to Shandong exceeding the 2024 average, reaching 1.1 million barrels per day (bpd) between February 1 and 20, according to Vortexa data.
Looking ahead, analysts warn that U.S. sanctions on additional oil tankers will limit Iran’s shipping capacity. Tehran now faces growing competition from Russia and Venezuela for vessels that have not yet been blacklisted by the U.S. Treasury.
As China adapts to earlier sanctions, the U.S. has responded by targeting additional tankers and traders. Washington has reiterated its commitment to disrupting Iran’s oil trade.
“The United States will use all available tools to target all aspects of Iran’s oil supply chain. Anyone engaging in Iranian oil trade faces serious sanctions risk,” Treasury Secretary Scott Bessent stated.
While Iranian oil exports have not collapsed, those involved in the trade continue to explore new methods to evade restrictions, including more ship-to-ship transfers.
According to Ja Ian Chong, an associate professor of political science at the National University of Singapore, completely halting Iran’s oil exports is unlikely. “There will always be some leakage under any form of sanctions,” he told Bloomberg.
Sanctions aim to make trade so costly and risky that it becomes unviable, discouraging both buyers and sellers, Chong added.
The U.S. does not anticipate achieving “zero Iranian oil exports,” but the Trump administration is determined to reduce them drastically. Iran’s oil exports currently stand at an estimated 1.5 million to 1.6 million bpd. Washington is tightening financial restrictions and pressuring regional governments to hinder Iran’s oil revenue collection.
“We will cut off Iran’s access to the global financial system by targeting regional entities that facilitate its oil revenues,” Bessent said at the Economic Club of New York. “Our goal is to shut down Iran’s oil sector and drone manufacturing capabilities.”
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