China complying with US sanction on Iranian crude exports
According to the White House, the US has reintroduced its “maximum pressure” strategy on Iran, aiming to reduce crude oil exports to zero. With China, the largest importer of Iranian crude, now complying with OFAC sanctions, Iranian exports – currently at 1.5mbpd – are expected to decline significantly.
Tanker demand set for significant rise
As China probably will replace Iranian barrels with oil from the Middle East Gulf (MEG) or the Atlantic Basin, the result will be longer sailing distances. This event alone could, according to Fearnleys Research, add a demand equivalent to 20-50 VLCCs, equivalent to a 2-6% increase in fleet utilization. This shift, already reflected in strong tanker rates this year, highlights the positive impact of changing trade flows on the tanker market, bolstering its growth outlook.
Source: whitehouse.gov and Fearnleys Research
