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Exclusive: China's Shandong Port bans US-designated vessels

Three traders reported that Shandong Port Group had banned U.S. sanctioned tankers calling at its ports. The province in eastern China is home to independent refiners who are the largest importers of oil coming from countries under U.S. sanctions.

Ship tracking data from Kpler revealed that the province imported 1.74 million barrels of oil per day (bpd), or 17% of China’s total imports, from Iran, Russia, and Venezuela in 2017.

The traders said that if the ban is enforced, it will increase shipping costs for independent refining companies in Shandong who are the main purchasers of discounted sanctioned oil from the three countries.

Washington increased sanctions last month against companies and shadow fleets that deal in Iranian oil. Donald Trump is expected to continue tightening sanctions on Iran when he takes office in January.

Traders said the ban could reduce imports to China, which is the largest oil-importing nation in the world.

Two traders confirmed the Shandong Port Notice issued on Monday. A third trader also confirmed it. The notice prohibits ports from docking, unloading or providing ship services for vessels listed on the Office of Foreign Assets Control (OFAC) list maintained by the U.S. Department of Treasury.

Shandong Port is responsible for the major ports along China's East Coast, including Qingdao Rizhao Yantai. These are important terminals used to import sanctioned crude oil.

Shandong Port has not responded to any calls or emails requesting a comment.

SHANDONG SAYS THE BAN WILL HAVE A 'LIMITED EFFECT'

Shandong Port, in a second notice, published on Tuesday and also reviewed by., said that it expected the shipping ban would have only a small impact on independent refiners, as the majority of oil sanctioned is carried on non-sanctioned tanks.

The notice stated that the ban was imposed after Eliza II, a tanker sanctioned by the government, unloaded at Yantai Port early in January.

Tanker tracking company Vortexa estimated that eight very large crude carriers with capacities of up to two million barrels discharged mainly Iranian oil in Shandong during December.

The vessels include Phonix Vigor Quinn Divine. All are sanctioned by U.S. Treasury.

According to Michelle Wiese Bockmann of maritime data group Lloyd's List Intelligence, the active shadow fleet transporting Iranian oil, Russian oil and Venezuelan crude is estimated at 669 tankers.

She added that of the 250-300 tankers involved in shipping Russian crude, only Sovcomflot and Iran's largest tanker operator NITC were excluded.

Treasury imposed sanctions between October and December on 35 tankers, which it claimed were part of Iran's "ghost Fleet", excluding vessels operated by NITC. Washington imposed separate sanctions in early 2024 on Sovcomflot.

Sources told The Weekly that the outgoing Biden Administration plans to impose sanctions against over 100 tankers that are involved with Russian oil.

The switch to non-sanctioned vessels could increase costs for refiners, who have been struggling in Shandong with low margins and slow demand.

The shares of Frontline, the leading tanker operator, jumped more than 9% after Tuesday's port ban news. This is due to an expected tightening in tanker availability.

Shipping analysts on Tuesday said that the U.S. Defense Department added China's biggest shipping company COSCO on Monday to a list it says includes companies working with China's Military. This could discourage charterers from using COSCO's tanks and increase the tightness in ships available for hire.

Last month, the price of Iranian crude oil sold to China reached its highest level in many years as new U.S. sanctions reduced shipping capacity and increased logistics costs.

The Iranian floating crude oil storage is at a record high for the past 12 months, with 20 million barrels. Furthermore, the Iranian export fleet has been stretched to its limit due to high exports per vessel. Goldman Sachs analysts stated last week that this has historically been linked to a subsequent decline in Iran's oil exports.

By the second quarter 2025, the investment bank anticipates that Iran's crude oil supply will drop from 3.25 million to 300,000 barrels per day.

The Biden administration is planning to increase sanctions against Moscow for its war in Ukraine. This could support the prices of Russian oil. Reporting by Aizhu, Siyi Liu, and Trixie Yap from Singapore; Colleen, Howe, and Jonathan Saul, in Beijing; Florence Tan, Lewis Jackson, and Mark Heinrich, in London; and writing by Lewis Jackson, Ed Osmond and Sharon Singleton.

(source: Reuters)