Iranian Crude Exports to China Surge While Saudi Arabia Faces Decline in Exports

Iran’s crude oil exports to China have experienced a significant rebound this February after a sharp decline in January due to U.S. sanctions. As reported by Bloomberg, preliminary data from Kpler indicates that Iranian oil exports to its biggest customer have surged to an average of 1.74 million barrels per day (bpd), marking an 86% increase from January levels.

This rebound in Iranian oil exports is largely attributed to the opening of new receiving terminals and the increase in ship-to-ship transfers, which have allowed Iran to bypass some of the restrictions imposed by the U.S. administration. These efforts have revived the flow of sanctioned crude, mainly to China’s private refiners, also known as "teapots," who benefit from the discounted prices on Iranian oil.

Despite these gains, the Biden administration’s crackdown on Iranian oil trade continues. In late 2024, the U.S. sanctioned multiple shipping companies, tankers, and entities involved in the illegal trade of Iranian crude. The U.S. Treasury Secretary, Scott Bessent, hinted at a potential return to the “maximum pressure” approach that was a hallmark of former President Trump’s first term. This strategy aims to push Iran’s oil exports down to a tenth of their current levels. However, analysts at Kpler warn that such measures could ultimately backfire, as private Chinese refiners may be hesitant to engage in transactions that might attract U.S. scrutiny, despite the appealingly low price of Iranian oil.

In related news, Saudi Arabia, the world’s leading oil exporter, saw its crude exports drop slightly in December 2024. According to data from the Joint Organizations Data Initiative (JODI), Saudi exports fell by 60,000 bpd from the high levels seen in November, reaching 6.15 million bpd. However, Saudi Arabia’s oil production remained relatively stable, with a minor decrease of 20,000 bpd, staying in line with its commitments under the OPEC+ agreement to cap production at around 9 million bpd.

Saudi Arabia’s decision to unilaterally cut production by an additional 1 million bpd has also played a role in the decrease in exports. Nevertheless, refinery throughput in Saudi Arabia rose by 189,000 bpd, reflecting an increased demand for refined products. Additionally, reports from OPEC+ indicate that there may be a delay in easing production cuts, with some delegates suggesting that the cuts might continue beyond April 2025 despite pressure from U.S. President Donald Trump to reduce oil prices.