Aug 21, 2026
Bloomberg: Iranian Oil Supply to Chinese Refiners Squeezed by US Blockade
Global floating storage of crude and petroleum products rose sharply in the early months of the Hormuz crisis, then declined significantly after the signing of the MOU as some countries regained the ability to export through the Strait. Even after the MOU collapsed, flows continued for a time, as shown in Figure 1. The subsequent collapse of the MOU and the imposition of the US blockade caused floating storage to rise again, particularly in Iranian waters.
The figure also illustrates how Venezuelan floating storage largely disappeared once the United States lifted sanctions on Venezuela, and how floating storage held by Gulf countries and Iraq nearly vanished following the MOU.
In contrast, the elevated floating storage volumes observed in Malaysia consist primarily of Iranian and Russian oil. The US blockade is rapidly depleting the Iranian oil available to Chinese buyers. Of the roughly 40 million barrels stored on tankers near Singapore, only about 4 million barrels remain unsold. Another 41 million barrels is trapped inside the Persian Gulf. Kpler expects virtually no new Iranian crude to be available for late-September delivery onward, enabling Iranian sellers to raise prices sharply. Iranian Light has moved from a roughly $3.50/bbl discount to Brent to a premium of as much as $3.50/bbl. Additional US sanctions targeting Chinese buyers could tighten supplies even further.
What is the impact of this elevated floating storage on oil markets? Has some of it migrated into actual onshore storage? The discussion below examines these questions.
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