Iran sends millions of oil barrels to China through Strait of Hormuz even as war chokes the waterway

Iran has continued to send large amounts of crude oil via the Strait of Hormuz to China even as the war between U.S.-Israel and Iran has jeopardized broader supplies through the critical waterway. Since the war began on Feb. 28, Iran has sent at least 11.7 million barrels of crude oil through the Strait of Hormuz, all of which were headed to China. This information was provided by Samir Madani, co-founder of TankerTrackers, a firm that monitors vessel movements with satellite imagery.

Many vessels have “gone dark” after Tehran threatened to attack any vessel attempting to pass through the waterway. Shipping intelligence data provider Kpler estimates around 12 million barrels of crude oil have passed through the strait since the war started, with a significant share potentially heading to China. However, confirming the final destination for these vessels has become increasingly challenging.

The Strait of Hormuz, a narrow waterway critical to the transportation of about one-fifth of the world’s oil and gas, has seen shipping traffic slow to a trickle since the war started last month, with tankers largely avoiding the besieged waterway.

Ten vessels in or near the Strait of Hormuz came under Tehran’s attack less than two weeks into the war, resulting in the death of at least seven seafarers onboard, according to the International Maritime Organization. Oil tankers transiting through the strait must be very careful, as stated by a spokesman for Iran’s Ministry of Foreign Affairs.

As oil prices soared on supply disruption fears, U.S. President Donald Trump encouraged ships stranded near the passageway to “show some guts” and push through the channel, claiming that Iran’s Navy had been neutralized.

Iran has also resumed loading tankers at the Jask oil and gas terminal along the Gulf of Oman, south of the Strait of Hormuz, as an alternative export outlet. The Jask oil facility, Iran’s only crude export outlet on the Sea of Oman that bypasses the Strait of Hormuz entirely, has rarely been used due to its less efficient loading process compared to the Kharg Island terminal.

China continues to stockpile Iranian crude oil, although shipments have been significantly lower since the war broke out. Beijing has accelerated its efforts to build its oil stockpile, with crude imports soaring 15.8% compared to a year earlier in the first two months of the year. Over the years, China has built up large crude stockpiles, estimated at 1.2 billion barrels as of January, to fulfill demand for 3 to 4 months.

The war in the Middle East has led to a surge in oil prices, with global leaders considering releasing oil reserves to mitigate potential supply shocks. Despite initial spikes, oil prices have since pulled back, with U.S. WTI crude oil for April delivery easing to around $84.9 a barrel and global benchmark Brent with May delivery at $88.9 per barrel.

In conclusion, the ongoing conflict in the Middle East has disrupted oil supplies and heightened tensions around the Strait of Hormuz, impacting global energy markets and prompting strategic responses from key players in the region.