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Iran is beginning to experience a decline in its oil exports to China due to the United States' imposed blockade on Iranian ports and ships since July 2023. This has led to a roughly 24% reduction in floating oil inventories, down to about 80 million barrels, with nearly complete stoppage of tanker movements through the Strait of Hormuz. Amid shrinking supplies, Iranian crude pricing has shifted: some recent shipments have been offered at premiums of up to two dollars above Brent futures, whereas they were previously sold at a discount of nearly three dollars per barrel. The market anticipates that the volume of Iranian oil available for export will continue to decrease, as Chinese refineries prepare to seek alternative sources such as Laba and Basra Iraqi crude, which could increase procurement costs. Meanwhile, the U.S. administration continues to impose new sanctions aimed at shipping companies and financial intermediaries, threatening to further tighten pressures on Iranian oil supplies and exports via the Strait of Hormuz. Approximately 20 million barrels pass through the strait daily, mostly heading to Asia, and ongoing reductions in supply threaten to push up global oil prices.
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