US tightens its grip on Iranian oil exports
The US sanctions agency OFAC today sanctioned another four VLCCs (aged 19-25) and two Aframaxes (aged 16 and 22) for their involvement in transporting Iranian oil.
OFAC also today sanctioned Shandong Shouguang Luqing Petrochemical, a teapot refinery in China’s Shandong Province which OFAC says has purchased millions of barrels of Iranian oil worth approximately half a billion dollars transported by shadow fleet vessels, some of which have been sanctioned.
On Thursday, OFAC sanctioned 10 tankers for transporting Iranian oil – six VLCCs (average age 24), two Aframaxes (both aged 21), one MR (aged 20), and one Panamax (aged 20). The US State Department added three Indonesia-flagged tugs to its list (aged 28, 39, and 44).
All except two of the tankers sanctioned on Thursday last week were operating in East Asia, but most have outdated AIS signals. The MR tanker was last seen in the Mideast Gulf in December 2023 while one of the VLCCs was last seen moving Venezuelan crude across the Atlantic last month.
One of the Aframax tankers discharged Russian Sokol crude at Rizhao in China's Shandong province on 10 March. The rest of the eight tankers in Asia have carried Iranian oil from Iran or southeast Asia to China.
The action takes the share of sanctioned tankers involved in transporting Iranian crude oil in 2024 to 65%, with the remaining 35% of vessels involved still unsanctioned.
While Iran is likely to continue to export oil despite US sanctions, its buyers in China are increasingly wary.
China’s teapot refineries, operating on razor-thin margins, may still buy Iranian oil (at a suitably discounted price) but the central government is unlikely to be sympathetic to their plight faced with substantial overcapacity in the country’s refining system and pressure from its state-owned firm who don’t buy Iranian oil. Sanctions targeting the teapot refiners themselves will only add to their difficulties.
Return to Suez Canal transit in doubt as Houthis renew pledge to attack shipping in the Red Sea
The effective collapse of the Israel-Gaza ceasefire following renewed Israeli strikes on Gaza early Tuesday and US strikes on Houthi targets Saturday mean that a return to the usual traffic through the Suez Canal and Bab el-Mandeb remains unlikely.
US air strikes on Yemen’s Houthis on Saturday followed a Houthi promise to renew attacks on Israeli ships on 12 March. Since the US strikes, the Houthis have launched three separate attacks on US war ships in the Red Sea.
Renewed tensions in the region raise the possibility of retaliation against by the Houthis and Iran against shipping in the region, including even a return to Iranian seizures of vessels in the Strait of Hormuz should the situation deteriorate further.
Loadings halted at Bonny after apparent attack on pipeline
An apparent attack on the 180k b/d Trans-Niger Pipeline (TNP) halted crude movements to Nigeria’s Bonny Light export terminal on Tuesday.
A fire occurred on the pipeline at the border of the Kpor and Bodo communities, and the pipeline's management has shut down the affected section.
TNP was operated until 14 March by Shell subsidiary SPDC. The pipeline has been the target of repeated oil theft, vandalism and sabotage in the past, and Shell shut the TNP entirely between April and October 2022.
It appears the pipeline attack has halted loadings at the Bonny terminal, where loading operations at the export terminal were reportedly already running up to two weeks behind schedule.
Since the start of 2014, around 160k b/d of Bonny Light crude oil has been exported from the terminal on average. If the halt proves lasting, the loss of these Bonny Light exports would, therefore, mean the equivalent of around five fewer Suezmaxes loading in West Africa a month. The Almi Voyager was the most recent tanker to load there, with around 800k bl of crude on 14 March.
TD6 reached one year high with increased CPC loading
Suezmax earnings in the Mediterranean reached their highest level in over a year yesterday, trading at $63,000/day, up from a low of $18,000 at the start of this year.
Recent capacity additions at Kazakhstan’s Tengiz oil field, which feeds the CPC system, began coming online at the end of January. Output is expected to increase by 260k b/d by the second quarter, bringing total output capacity close to 960k b/d. This increase translates to approximately one additional Suezmax per day.
The April CPC programme consists of 38 Suezmax cargoes, slightly lower than March’s 41 but significantly above historical levels. By comparison, monthly CPC Suezmax loadings averaged 22 shipments in 2024. Aframax cargo loadings were down from 33 in January to 25 in February, and so far in March loadings remain heavily weighted toward Suezmaxes.
Ukrainian drone attacks on the Kropotkin pumping station along the CPC pipeline this week, following similar attacks at the end of last month, do not appear to have materially impacted tanker loadings.
While Kazakhstan’s planned production cuts in line with OPEC+ quotas were expected to temper volumes, there has been little evidence of a tangible impact thus far.
Nonetheless, this could come. Kazakhstan removed its oil minister on Tuesday amid the ongoing struggle to align oil output with its OPEC quota.
Another factor influencing rates is increasing ton-mile demand with 9 million barrels of CPC Blend heading to the East in March and another 3 million barrels already booked for April. This shift toward longer-haul voyages has tightened available tonnage in the Mediterranean and Black Sea, reinforcing freight market strength.
While Black Sea demand remains robust, the spillover effect on other key Suezmax routes such as West Africa to UKC and US Gulf to UKC has been limited.
The Atlantic market has yet to see sufficient demand levels to fully capitalise on the tightening tonnage situation in the Black Sea.