An unprecedented volume of Iranian crude oil is set to arrive at China’s northeast Dalian Port this month and in early November before US sanctions on Iran take effect, according to an Iranian shipping source and data on Refinitiv Eikon.
A source from the National Iranian Tanker Company (NITC) said the company is shipping more than 20 million barrels of oil to Dalian, Reuters reported.
“As our leaders have said it will be impossible to stop Iran from selling its oil. We have various ways of selling our oil and when the tankers reach Dalian, we will decide whether to sell it to other buyers or to China,” the source said, without elaborating further.
So far, a total of 22 million barrels of Iranian crude oil loaded on supertankers owned by NITC are expected to arrive at Dalian in October and November, the data showed. Dalian typically receives between one million and three million barrels of Iranian oil each month, according to the data that dates back to January 2015.
Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, is finding fewer takers for its crude ahead of US sanctions on its oil exports that will take effect on Nov. 4.
Iran previously stored oil at Dalian during the last round of sanctions in 2014 that was later sold to buyers in South Korea and India. Some of the biggest refineries and commercial oil storage facilities in China are located in Dalian.
One of 11 Very Large Crude Carriers (VLCCs) – Dune – discharged oil into a bonded storage tank at the Xingang section of the Dalian port on Oct. 8, Reuters reported last week, while a second VLCC Dino I switched off its transponder on Oct. 13 near the port.
Dino I reappeared earlier this week near Taiwan and has discharged its cargo onboard.
The Xingang area is home to several tank farms including commercial and strategic reserves. China National Petroleum Corp. (CNPC) and Dalian Port PDA Co. Ltd. both operate commercial storage in the area, according to information on the companies’ websites.
Keeping oil in bonded storage gives the cargo’s owner the option of selling the oil into China or to other buyers in the region.
Three of the tankers, set to arrive in China in November, are heading to Changxing Island, the data showed.
Turkey after waivers
Industry sources said Turkey’s top refiner, Tupras, is in talks with US officials to obtain a waiver allowing it to keep buying Iranian oil.
The United States withdrew from the nuclear deal between Iran and other global powers earlier this year, but is also considering offering waivers to some allies that rely on Iranian supplies.
NATO member Turkey depends heavily on imports to meet its energy needs and neighboring Iran has been one of its main sources of oil because of its proximity, the quality of its crude, and favorable price differentials.
Turkey has already made efforts to cut its purchases ahead of the US sanctions, but would prefer to keep up some level of Iranian oil imports past November, an industry source familiar with the matter said.
“They would like to be able to continue importing 3-4 cargos a month, like they did during the previous sanctions round. But if the US would tell them to stop, they will oblige and work toward achieving that,” the source said.
Turkey imported around 97,000 barrels per day of Iranian oil in August and 133,000 bpd in September, compared with just over 240,000 bpd in April, tanker tracking and shipping data showed.
And in the first two weeks of October, Turkey has purchased three one million barrel-cargos of Iranian oil – a level that would equate to about 97,000 bpd if it made no other purchases this month.
Case by case
Asked if Washington was negotiating with Turkey for a waiver, a US State Department official said the department was prepared to work with countries that are reducing their imports on a case-by-case basis.
On Monday, Brian Hook, the US special representative on Iran, did not comment directly about any talks on waivers with Turkey. But he told reporters countries seeking sanctions relief must “explain their specific and unique circumstances.”
Hook said those conversations were private, but he added the State Department was “taking into account the needs of our allies and partners around the world.”
During 2017, Iran was Turkey’s top crude oil source, accounting for 11.5 million tons of its total purchases nearing 26 million tons, followed by Iraq and Russia.