Five sources and shipping data indicate that a few newer Chinese terminals have recently begun receiving oil tankers sanctioned from the U.S. This has provided logistical relief after a large port operator suddenly banned such deliveries last week.

The deliveries come after the state-owned Shandong Port Group announced in January that it would ban shipments of vessels designated by U.S. Treasury. This announcement was made to curb imports into eastern Shandong Province, which is the hub for independent refining companies that are the primary Chinese buyers who purchase sanctioned Russian or Iranian crude.

According to traders' information and data from Vortexa Analytics, Kpler and Vortexa Analytics, the recent shipments of oil to the newer terminals represent a fractional amount of the total Chinese crude imports.

Due to the sensitive nature of the topic, the trade sources refused to be identified.

U.S. Sanctions and Shandong Port Restrictions have pushed up the costs of Chinese refineries, and stalled commerce by driving up freight rates. Costly non-sanctioned ships are now filling in some of that shipping gap.

According to Vortexa & Kpler, on Tuesday, the U.S. sanctioned Aframax-sized Si He transported Russian ESPO Blend crude oil into a terminal in Shandong’s Dongying Port.

According to Vortexa, the Dongying Terminal is smaller than other nearby facilities, such as those in Qingdao Rizhao Yantai operated by Shandong Port Group. It is also operated by Baogang International or BIPC. BIPC, a privately held company, is controlled by Shandong Wanda Holdings.

BIPC has not responded to any emails seeking comment. The company could not be reached by phone.

According to Vortexa's source and an oil trader, in mid-January the Guyana-flagged Nichola (formerly named Spirit of Casper), a U.S. designated vessel, transshipped about one million barrels of Iranian crude oil from Malaysia in a terminal located in Huizhou in the south.

Huaying Petrochemical operates the berth, which is a private terminal and storage firm owned by Wintime Energy Group Co. of Shanghai.

A Wintime official in investor relations said that the Huaying Terminal received cargoes from Malaysia or Singapore, but not Iranian. He added that they conduct business according to Chinese law. The official stated that the terminal didn't register Spirit of Casper, but did not comment on Nichola.

Iranian oil imported into China is often labeled as coming from Malaysia.

China is the biggest buyer of Iranian crude oil.

SANCTIONS OPPOSITION

Beijing has always opposed unilateral U.S. sanction, defended oil trade with Iran and refrained from criticizing Russia for its full-scale invasion in Ukraine.

China's Foreign Ministry reiterated its stance in response to the question about the terminal deliveries and asked that the U.S. stop disrupting or damaging normal commerce between China and other countries.

Huaying has received Iranian cargoes before. Vortexa reports that the Huaying terminal unloaded 7 million barrels (or a little more) of Iranian oil by 2023. All of these barrels were then reloaded onto ships heading north to Shandong, a major refining hub.

Separately, Vortexa & Kpler report that a tank farm opened on Huangzeshan Island in eastern Zhejiang Province in late 2023. Iranian oil was transported by the U.S. sanctioned Clio during the second half January.

Fury, a second U.S. designated vessel that carried Iranian oil, was discharged on the same terminal, according to Vortexa LSEG, and Kpler, on February 9. Nichola, Fury and LSEG were designated on October 11

Zhejiang Energy Group is the company that controls this facility. It's a utility operator and trader of energy backed by the provincial government.

Zhejiang Energy did not answer any of my calls. The company didn't respond to a request for comments sent via email.

The Huaying, Huangzeshan and BIPC terminals at Dongying are more designed as hubs for transfer and blending than to serve refiners directly.

Washington's toughest sanctions to date were imposed on the Russian oil supply chain on January 10th by designating tankers which transport about 40% of Moscow’s seaborne crude imports. China is Russia's second largest customer for tanker-shipped crude oil, after India.

The U.S. Treasury imposed additional sanctions last Thursday on individuals and tankers that helped ship Iranian crude oil into China. Last week, President Donald Trump re-launched his "maximum press" campaign against Iran. This includes efforts to drive Iran's oil exports to zero.

(source: Reuters)