China adheres to U.S. sanctions on Iranian crude oil exports
According to the White House, the United States has reinstated its "maximum pressure" strategy on Iran, aiming to completely halt crude oil exports. With China, the main importer of Iranian crude, now adhering to OFAC sanctions, Iranian exports — currently at 1.5 million barrels per day — are expected to significantly decrease.
The demand for oil tankers is expected to see a significant increase
China might substitute Iranian barrels with oil from the Persian Gulf or the Atlantic Basin, leading to longer shipping distances. According to Fearnleys Research, this shift alone could create a demand equivalent to 20-50 VLCCs, representing a 2 to 6% increase in fleet utilization. This change, already evident in the high tanker rates this year, highlights the positive impact of shifting trade flows on the tanker market, enhancing its growth prospects.
Source: whitehouse.gov and Fearnleys Research