As Sanctions Approach, Dalian Provides Storage for Iranian Oil
According to a new report, the Chinese port of Dalian is set to become a hub for Iranian oil exports when sanctions on Tehran's nuclear program take effect next month. Nearly a dozen VLCCs belonging to the National Iranian Tanker Company (NITC) have recently carried consignments to Dalian, compared with the usual rate of just one or two per month, Reuters reports.
The Trump administration's renewal of sanctions on Iranian crude has already cut deeply into sales, according to traders, and it is likely to be even more effective than initially expected. “I think the consensus has moved to it’s going to be well beyond 1 million bpd that’s cut, and maybe 1.5 million bpd," said Trafigura's co-head of oil trading Ben Luckock, speaking to reporters last month.
Iran's exports peaked in April at 2.4 million bpd and fell to just 1.7 million bpd in September. The last round of sanctions, which ended in early 2016, succeeded in reducing Iran's oil exports to one million bpd within three years of implementation.
South Korea and Japan are winding down their purchasing, and China's state oil companies have reduced their volumes. However, Iran is likely to have at least a few buyers after sanctions take effect. India has committed to continuing its purchases, and it may be buying even more than has been officially reported, if satellite tracking analyses are accurate.
During the last round of sanctions, Dalian's bonded tank farms served as an overseas storage point for blacklisted Iranian crude. The National Iranian Oil Company used Dalian's storage to make shipments to India several times in 2014.