Iran's IRGC races to offload unsold oil in China before Trump takes office

Iran's Islamic Revolutionary Guard Corps (IRGC) is seeking to sell oil stored in China before US president-elect Donald Trump can block sales with tougher sanctions, an informed source told Iran International.

Iranian authorities have instructed the IRGC to sell the sanctioned oil stored at Dalian Port in northeast China through intermediary firms, the source speaking on condition of anonymity said.

“The directive stems from concerns that a return of Donald Trump to power and the reimposition of his ‘maximum pressure’ policy might freeze access to these reserves, estimated to be worth around $1 billion," the source said.

"The sale of these reserves is reportedly being facilitated through financial guarantees provided by Iranian companies operating in China.”

Data from tanker-tracking firm Vortexa shared with Iran International show that after a decline in oil sales, Iran's floating oil reserves have surged from approximately 36 million barrels in mid-September to 48 million barrels this month - an increase also valued at nearly $1 billion.

Per the Iranian budget, at least 12.6 billion dollars of Iran's oil exports are earmarked for the IRGC, empowering the paramilitary body to sell the oil to Chinese customers and use the revenue to bolster its armed capabilities and militia allies in the Middle East.

Iran’s oil, sanctioned by the United States and its allies, is often rebranded using tankers from a so-called dark fleet.

Often in Malaysian and Singaporean waters, it is relabeled as oil originating from Iraq, the United Arab Emirates, Oman or particularly Malaysia. This rebranded oil is then shipped to China’s smaller independent refineries, known as teapots.

Shandong Port in China serves as the primary hub for this rebranded oil. However, tanker-tracking companies have observed a significant rise in shipments to Dalian Port this year.

The US Treasury Department this month blacklisted 45 tankers for aiding Iran in circumventing sanctions. According to industry sources, these tankers were primarily used to transport Iranian oil to Shandong Port.

Despite this, over 100 large vessels remain unsanctioned in the dark fleet remain unsanctioned according to Vortexa data and continue to carry Iranian oil to China, albeit at reduced volumes.

Iran International reported earlier this month that Iran's daily oil exports had dropped by over half a million barrels per day (bpd) compared to September, falling to approximately 1.3 million bpd in November.

Data from Kpler, a commodity analytics firm, shows that Iran’s average daily oil exports this year stood at about 1.6 million barrels, with almost all of the exports directed to China.

This marks an increase of 300,000 bpd compared to last year. However, the volume of oil delivered to China has plummeted in recent weeks. Additionally, Iran has ceased oil shipments to Syria following the fall of Bashar al-Assad.

Tanker Trackers recently reported that, coinciding with Assad’s downfall, the last Iranian oil tanker carrying 750,000 barrels returned from the Suez Canal to Iran.

The future of Iran's oil exports to China remains uncertain. Yet, Vortexa data shows that Iran's unsold floating oil reserves continue to rise.

Most of Iran's floating oil is stored in Singaporean waters, awaiting brokers and buyers for shipment to China.

The drop in Iran's oil exports to 1.3 million barrels comes as the government, led by Masoud Pezeshkian, plans for daily exports of 1.85 million barrels next year.

Before US sanctions in 2018, Iran exported 2.5 million bpd. This figure plummeted to 350,000 bpd by the final months of Donald Trump's presidency in 2020. However, Iran’s oil exports gradually increased under his successor.

Top figures in the incoming Trump administration have pledged to renew his maximum pressure policy against Iran.