On the coast of China, two ports guard a very valuable treasure: 25 million barrels of Iranian oil, a cargo that has been trapped in a political and commercial limbo for six years. This oil, valued at approximately $1.75 billion at current prices, is stored in the ports of Dalian and Zhoushan, a symbol of the challenges Iran faces in trading under severe international sanctions imposed by the United States. The case of this oil is somewhat curious, since China does not hesitate to buy millions of barrels of Iranian crude oil for its internal consumption (this is discounted oil), but on this occasion, Beijing has decided to stick to the sanctions and block Iranian crude oil that was going to other Asian markets.
The origin of this story dates back to 2018, when then-President Donald Trump granted temporary permits for some buyers to purchase Iranian oil. Taking advantage of this window, the National Iranian Oil Company (NIOC) sent crude oil to these Chinese ports, using rented tanks as a flexibility strategy to sell it in the Asian market. However, in 2019, Trump revoked the exemptions, leaving oil trapped, unable to find buyers or be removed from warehouses, according to a Reuters report.
Meanwhile, storage fees have been piling up. According to sources close to the matter, Dalian tank operator PDA Energy demands payment of $450 million in accumulated feeswhile in Zhoushan, a private company, CGPC, is handling the situation without public comment. This problem has become a thorn in the side for Tehran, especially now that Trump prepares to return to power, with the threat of tightening sanctions again.
A growing urgency
Last December, Iran’s Foreign Minister Abbas Araghchi traveled to Beijing in search of a solution. Although negotiations made some progress, the process of releasing the oil remains complex and riddled with obstacles. “In order to sell it, Iran would have to reload the oil onto ships, conduct a ship-to-ship transfer on the high seas and redocument it to hide its origin.“explained an Iranian official familiar with export procedures.
China, which has been a consistent buyer of Iranian oil in recent years, acquiring 90% of Iran’s exports at discounted prices, now faces a crossroads. Although Beijing claims not to recognize unilateral US sanctions, the trapped cargo demonstrates the practical limitations of this stance. “China’s cooperation with Iran is legitimate,” the Chinese Foreign Ministry responded when asked about the issue, but avoided going into details.
Iran’s desperation
Despite the restrictions, Iran has proven adept at clandestine oil trading. With a fleet known as the ‘ghost fleet’, he uses strategies such as changing documents and turning off navigation systems to avoid detection. However, this particular case, where the oil was clearly documented as Iranian, illustrates the risks of operating under sanctions. and how US measures can complicate even the most ingenious operations.
Tehran’s recent moves show growing desperation. The country is in an economic, energy and almost social crisis from which there is no easy escape. With Trump set to reinstate tougher policies against Iranian oil, freeing barrels stuck in China has become a strategic priority. “It is a dilemma that not only affects our finances, but our ability to remain operational in a market dominated by sanctions,” said an Iranian official involved in the negotiations.
A reflection of greater tensions
This case also highlights the complex balance between Iran and China. On the one hand, Beijing has benefited greatly from Iranian exports, buying crude oil at deep discounts. On the other hand, customs restrictions and accumulated costs at Chinese ports reflect the difficulties of operating under the pressure of international sanctions.
Iran, a country with decades of experience evading sanctions, continues to face monumental challenges. While trying to recover the trapped oil, talks with Chinese operators continue, seeking an agreement that can ease tensions and free the crude oil to more accessible markets to enter those more than 1 billion dollars so necessary for Iran.
The story of this stranded oil is more than a tale of frustrated trade. This clash between Iran and China reveals how sanctions and geopolitics can block vital resources at a time of high energy demand and great need for Tehran. These barrels represent not only necessary income for Iran, but are also an opportunity to demonstrate that the country that decades ago had some power in Asia still maintains some of its influence. Can Tehran release its treasure trove before sanctions tighten further? The clock keeps ticking.
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