In Singapore, Iranian oil deliveries to China are expected to decline in the short term due to new U.S. sanctions on a Chinese refiner and vessels. This has led to an increase in shipping costs. Despite this, traders anticipate that buyers will find alternative methods to maintain some level of oil imports.

The U.S. recently imposed sanctions on entities like Shouguang Luqing Petrochemical, an independent refinery in Shandong province, and ships supplying oil to such facilities in China, which are major purchasers of Iranian crude. These sanctions are part of President Donald Trump's strategy to intensify pressure on Tehran and reduce its oil exports.

The reduction in Iranian oil shipments to China had already started due to previous sanctions impacting shipping capacity and increasing freight expenses. However, industry insiders believe that with adjustments in business models, imports could continue. Some larger private refiners in China may temporarily hold back on imports due to these sanctions.

Freight costs for shipping Iranian oil to China have more than doubled since late 2024, making it more expensive to transport oil from Malaysia to Shandong. Despite the challenges, Chinese data from February shows an increase in Iranian oil imports compared to the previous month.

The Chinese government, which defends its trade relations with Iran as legal, has expressed discontent with the unilateral sanctions imposed by the U.S. This stance by China could reassure buyers and provide some comfort amidst the escalating situation.