Iran seeks to free 25m barrels of oil stuck in Chinese ports

Alamy

• Stranded oil worth $1.75bn
• Fear of further Trump sanctions
• Large sums owed in storage fees

Iran is pushing to free 25 million barrels of the country’s oil that has been stuck for six years in Chinese ports because of sanctions imposed by Donald Trump during his first presidency, sources have said.

Trump is expected by analysts to tighten sanctions again on Iranian oil exports to
limit Tehran’s income when he returns to power on January 20, as he did during his first term as president.

China, which says it does not recognise unilateral sanctions, has been buying about 90 percent of Tehran’s oil exports in recent years at discounts that have saved its refiners billions of dollars.

But the stranded oil, worth $1.75 billion at today’s prices, highlights the challenges Iran is facing with selling oil even in China.

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Iran’s oil ministry did not respond to a request for comment. China’s foreign ministry, asked about the stranded oil, said China’s cooperation with Iran was legitimate but declined to comment further.

Despite some of the West’s toughest sanctions, Iran has built a roaring global trade for its oil, relying on a shadow fleet of tankers that conceal their activity. Most Iranian oil sold to China is re-documented as non-Iranian en route to Chinese ports.

The stranded oil, however, was documented as Iranian oil when Iran’s national oil company, NIOC, delivered it to Chinese ports around October 2018 using waivers granted by Trump, two of the four sources said.

NIOC stored the oil in the ports of Dalian and Zhoushan in east China, where it had been leasing tanks, the sources said.

But in early 2019, Trump scrapped the waivers, and the oil never found buyers or cleared Chinese customs and remained trapped in the tanks, according to three of the four sources.

Talks between Iranian officials and the Chinese storage operators on payment of hundreds of millions of dollars in storage fees and other conditions for releasing the oil took on added urgency in recent weeks because of Tehran’s concerns that Trump could again tighten sanctions, one of the Iranian sources said.

Iran’s foreign minister, Abbas Araghchi, visited Beijing in December and made some progress on the issue of stranded oil, an Iranian source said, but gave no further details.

Iran would have to reload oil from tanks into ships, make a ship-to-ship transfer at sea and redocument the oil in order to be able to sell it, one of the Iranian sources said, citing his experience with Iranian oil exports and Chinese customs proceedings.