China's Shandong Port, entry point for most sanctioned oil, bans US-designated vessels

Frontline

07/01/2025 09:17

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      Ships cannot dock, unload or receive shipping services
    

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      Ban on ports including Qingdao, Rizhao and Yantai
    

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      May slow imports, push up costs for refiners, traders say 
    

  
 (Rewrites first paragraph, adds details on Shandong imports in
paragraph 2, Goldman Sachs on Iranian crude in paragraphs 17,18)
    By Chen Aizhu, Siyi Liu and Trixie Yap
       SINGAPORE/BEIJING, Jan 7 (Reuters) - 
    Shandong Port Group has banned U.S.-sanctioned tankers from
calling into its ports in the eastern Chinese province, home to
many independent refiners that are the biggest importers of oil
from countries under U.S. embargo, three traders said.
  
        The province imported about 1.74 million barrels per day
(bpd) of oil from Iran, Russia and Venezuela last year,
accounting for about 17% of China's imports, ship tracking data
from Kpler showed.
  
        If enforced, the ban would drive up shipping costs for
independent refiners in Shandong, the main buyers of discounted
sanctioned crude from the three countries, the traders added.
  
    Last month, Washington imposed further sanctions on
companies and the shadow fleet that deal with Iranian oil.
President-elect Donald Trump, who takes office on Jan. 20, is
expected to tighten sanctions further on Iran, as he did during
his first administration. 
        The ban could slow imports into China, the world's
largest oil importing nation, traders said.
  
    The Shandong Port notice issued on Monday was obtained from
two of the traders and confirmed by a third. It forbids ports to
dock, unload or provide ship services to vessels on the Office
of Foreign Assets Control list managed by the U.S. Department of
the Treasury.
    Shandong Port oversees major ports on China's east coast
including Qingdao, Rizhao and Yantai, which are major terminals
for importing sanctioned oil. 
    Shandong Port did not respond to calls or an email from
Reuters requesting comment.
    
    SHANDONG PORT SAYS BAN TO HAVE 'LIMITED IMPACT'
    In a second notice on Tuesday, also reviewed by Reuters,
Shandong Port said it expects the shipping ban to have a limited
impact on independent refiners as most of the sanctioned oil is
being carried on non-sanctioned tankers.
    The ban came after sanctioned tanker Eliza II unloaded at
Yantai Port in early January, the notice said.
    In December, eight very large crude carriers, with a
capacity of two million barrels each, discharged mostly Iranian
oil at Shandong, estimates from tanker tracker Vortexa showed.
    The vessels included Phonix, Vigor, Quinn and Divine, which
are all sanctioned by the U.S. Treasury.
    A switch to using non-sanctioned ships could inflate costs
for refiners in Shandong, which have been struggling with poor
margins and sluggish demand, traders said.
    The price of Iranian crude sold to China hit the highest in
years last month as fresh U.S. sanctions tightened shipping
capacity and drove up logistics costs.
    Iranian crude oil floating storage has risen to a 12-month
high of 20 million barrels and the Iranian export fleet is
relatively stretched with a high level of exports per vessel.
This has historically been associated with subsequent declines
in Iran's crude exports, Goldman Sachs analysts said last week.
        The investment bank expects Iran's crude supply to drop
by 300,000 bpd to 3.25 million bpd by the second quarter of
2025.
  
    Prices of Russian oil, which rose to about a two-year high,
could remain supported as the Biden administration plans to
impose more sanctions on Moscow over its war on Ukraine.
    

 (Reporting by Aizhu Chen, Siyi Liu and Trixie Yap in Singapore;
Colleen Howe in Beijing; Writing by Lewis Jackson and Florence
Tan; Editing by Christian Schmollinger, Ed Osmond, Sharon
Singleton and Mark Heinrich)
 ((siyi.liu@thomsonreuters.com; aizhu.chen@thomsonreuters.com))