Iranian oil offers to Chinese buyers fall as US blockade tightens, sources say

• Iranian crude offers for September-October delivery have declined as floating storage in Asian waters fell to about 30 million barrels, half the usual levels, with some cargoes now trading at $2/barrel premiums versus previous $3 discounts
• No visible Iranian supertanker crossings through the Strait of Hormuz have been detected since the July 13 blockade, with Chinese teapots now seeking alternative supplies from Brazil and Iraq
• U.S. Treasury threatened new sanctions for Monday, though Chinese refiners previously sanctioned have continued processing Iranian oil, with Beijing rejecting unilateral sanctions

Summary

Key Development: Iranian crude oil offers to Chinese buyers have declined sharply as a U.S. blockade imposed on July 13, 2026, severely curtails Tehran's exports. The blockade followed the breakdown of a peace deal and aims to cut off Iran's primary revenue source.

Critical Figures

• China's Iranian oil imports fell to 785,000 barrels per day (bpd) in June—the lowest since February 2023
• July imports rose slightly to 823,000 bpd, but August dropped to just 534,000 bpd
• This compares to 2025's average of 1.4 million bpd
• Iranian crude in floating storage fell from 105 million barrels to 80 million barrels post-blockade
• Only 30-40 million barrels remain in Asian waters, half normal levels

Market Impact

• Iranian crude pricing shifted dramatically from a $3/barrel discount to a $2/barrel premium over ICE Brent futures within days
• No Iranian supertankers have visibly crossed the Strait of Hormuz since mid-July
• September-October cargo offers have declined significantly compared to July-August

Sector Implications

• Chinese independent "teapot" refiners in Shandong province—representing one-fifth of China's refining capacity—face supply shortages
• Buyers are seeking alternatives, including Brazilian Lapa crude and Iraqi Basrah crude
• U.S. Treasury Secretary Scott Bessent threatened Iran with unprecedented sanctions on August 21, with details expected August 25

Geopolitical Context: China, which purchases over 80% of Iran's exported oil, rejects unilateral sanctions. Chinese refiners remain cautious but indicate they're unlikely to significantly reduce purchases despite sanction threats.