Shandong Ports Ban On U.S.-Sanctioned Ships Could Disrupt China’s Oil Imports

China’s Foreign Ministry said that it is not aware of Shandong Port Group’s (SPG) decision to ban U.S.-sanctioned ships from docking at its terminals.

SPG manages major ports on China’s east coast, including Rizhao, Qingdao, and Yantai. These ports are essential for importing oil, especially from Iran, Russia, and Venezuela, countries under U.S. sanctions.

Last year, almost 20% of China’s total oil imports came from these sanctioned countries.

If the ban is enforced, traders say it could increase shipping costs for independent refineries in Shandong, which are the main buyers of discounted crude from these countries. This could slow down oil imports into China.

A spokesperson for China’s Foreign Ministry said, “As a matter of principle, I am not aware of the relevant situation,” responding to a Reuters report about the ban.

The spokesperson also reiterated China’s long-standing opposition to U.S. sanctions, adding that China does not accept “illegal unilateral sanctions and long-arm jurisdiction without U.N. Security Council authorization.”

The port group has reportedly issued notices to its staff, instructing them not to berth, unload, or provide services to ships on the U.S. sanctions list.

These sanctions target tankers carrying crude oil from Iran, Russia, and Venezuela, making SPG’s ports crucial for importing oil from these countries.

UK shipbroker Braemar said that the move could support compliant tankers, though the exact date for the ban’s implementation has not been released.

Braemar also predicted the decision would lead to a reduction in China’s imports of Iranian crude, which have already decreased since October due to tighter U.S. sanctions.

According to Braemar, 62% of China’s crude imports from Iran, Russia, and Venezuela last year came through Shandong ports.

Of the 183 tankers that arrived in Shandong with crude from these countries, 63 were listed under U.S. sanctions. The port’s ban could force Chinese buyers to find compliant tankers or use different ports to unload their cargoes.

Braemar further explained that the ban would likely cause inefficiencies, raising the cost of Iranian crude compared to other oil grades.

This could put additional pressure on independent refineries in China, which are already struggling with weak fuel demand and narrow profit margins. As a result, these refineries would be hit especially hard.

In response to the ban, more independent Chinese refineries have been inquiring about West African crude.

Traders suggest that the ban could lead to increased use of crude from other regions, like the Middle East Gulf and countries in the Atlantic basin, such as Brazil, where production is expected to expand next year.

Reference: Reuters

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