MARKET NEWS

(Bloomberg) -- Oil flows from Iran to China rebounded this month after traders smoothed out logistical bottlenecks caused by tighter US curbs, enabling buyers in the largest importer to shift a backlog of cargoes.

An increase in ship-to-ship transfers, plus the emergence of alternative receiving terminals, led to the jump, according to traders who participate in the market and asked not to be identified because the matter is sensitive.

Imports over February are seen swelling to 1.74 million barrels a day, according to preliminary data from intelligence firm Kpler Ltd. That’s 86% higher than the daily rate in January, and the most since October, the data showed.

China is typically the largest taker of Iranian crude, with most cargoes going to smaller, independent refiners known as teapots. The trade — a key source of revenue for Tehran — has faced pressure from rounds of US sanctions, with the incoming Trump administration also tightening curbs earlier this month.

In an indication of the pressure, US Treasury Secretary Scott Bessent said last week that the US aimed to squeeze Iran’s oil exports to less than 10% of current levels. Chinese, as well as perhaps Indians, were buying sanctioned oil “and that is unacceptable,” Bessent told Fox Business.

Scrutiny had risen since late last year, during the final months of the Biden administration. Dozens of tankers, traders and shippers have been blacklisted and sanctioned, prompting additional caution from buyers and logistics operators. Still, the supply chain responded almost as quickly, with the use of unsanctioned tankers and new shell companies, the traders said.

--With assistance from Serene Cheong.