China Slashes Iranian Crude Imports, May Daily Flows Plunge to 160,000 Barrels
Miles Bennett
Iran's crude exports to China collapsed from 1.8 million b/d in February to roughly 160,000 b/d in May — a drop exceeding 90%. A first-ever U.S. naval blockade is physically severing an oil lifeline that years of financial sanctions never fully closed.
From 1.8 million barrels to 160,000 — what happened?
Bloomberg-compiled data show Iran's crude exports to China fell to about 160,000 b/d in May, down from 1.8 million b/d in February — a decline of over 90%.
This means → Iran's largest export channel has nearly shut, not because buyers lost interest, but because cargoes physically cannot leave.
JTD Energy Services chief strategist John Driscoll: "Iranian oil trade with China is facing its most severe test ever."
How is a blockade different from sanctions?
Decades of financial sanctions were routinely bypassed — ship renaming, transponder blackouts, third-country re-routing.
This time is different: the U.S. imposed a physical naval blockade, intercepting cargoes rather than just freezing accounts.
In plain terms = before, Washington said "you can't pay"; now it says "the ship doesn't sail."
Vortexa estimates that no Iranian oil has transited the Strait of Hormuz so far this month.
Where is all that oil sitting?
Kpler data show roughly 132 million barrels stored on tankers in and around the Persian Gulf.
At least 57 million barrels sit on vessels near China, Singapore, and the Strait of Malacca — down nearly 55% since the blockade began.
This means → floating storage — tankers used as temporary warehouses — is being drawn down, but nothing is replacing it.
Why aren't Chinese buyers snapping up cheap barrels?
Iran's biggest customers are China's independent refiners — the so-called "teapots" — which typically take about 90% of Iran's exports.
But teapots are deep in operating losses. Sellers have slashed prices aggressively, to little effect — buyers themselves are losing money and have no margin to stockpile risk barrels.
Energy Aspects forecasts teapot throughput will fall a further 200,000 b/d in June from May levels.
This reflects a double squeeze: demand is shrinking at the same time supply is blockaded.
Has Beijing's stance shifted?
Beijing previously ordered teapots to maintain production at all costs to cushion the impact of war involving Iran.
As losses mounted, that directive has recently loosened.
Separately, a recent U.S. sanction on Hengli Petrochemical (Dalian) has deepened caution around Iranian crude trades — traders say razor-thin margins leave almost no incentive to take on added risk.
Can Iran hold out?
Iran's oil output fell 19% last month; export revenue is under pressure.
Earlier gains from higher prices and faster shipments built a cash buffer, but that cushion is eroding.
FGE NexantECA honorary chairman Fereidun Fesharaki: "China has plenty of alternative oil sources — there is no pressure at all right now."
Put simply = China doesn't need Iranian oil. Cheaper Russian crude further undercuts Iran's competitiveness — Tehran's bargaining chips are shrinking.
Content is for reference only, not financial advice.