The Iranian oil has been stranded in two Chinese ports in Dalian and Zhoushan since 2018. Credit: IVAN KUZKIN/Shutterstock.

Iran is seeking to reclaim approximately 25 million barrels of its oil, valued at $1.75bn (IR73.65trn), which have been held in two Chinese ports for the past six years due to sanctions imposed by the US, reported Reuters, citing Iranian and Chinese sources familiar with the matter.

The oil is now at the centre of discussions between Iran and China as the former anticipates the potential tightening of sanctions with the return of Donald Trump to power in the US on 20 January.

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The oil in question was delivered to the ports of Dalian and Zhoushan around October 2018 by Iran’s national oil company, NIOC, using waivers granted by the Trump administration.

However, the revocation of these waivers in early 2019 left the oil without buyers, trapping it in storage tanks. The situation is complicated by storage fees exceeding $450m, as reported by one of the Iranian sources.

China, which has traditionally been a major buyer of Iranian oil, purchasing around 90% of Iran’s exports in recent years, is confronted with the dilemma of the stranded supplies, underscoring the difficulties Iran faces in selling its oil, even to a country that does not recognise unilateral sanctions.

Despite the sanctions, Iran has managed to maintain a robust oil trade through a ‘shadow fleet’ that often disguises the origin of its shipments, with most Iranian oil sold to China being redocumented as non-Iranian.

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The storage tanks in Dalian are operated by PDA Energy, a subsidiary of Liaoning Port Co, while in Zhoushan the tanks are managed by private storage operator CGPC.

The urgent need to resolve the issue has led to Iranian officials engaging in talks with Chinese storage operators over the payment of storage fees and conditions for releasing the oil.

Iran’s Foreign Minister, Abbas Araghchi, visited Beijing in December, making some progress on the issue, although details remain undisclosed. To sell the oil, Iran would need to transfer it from the tanks to ships, conduct a ship-to-ship transfer at sea and redocument the cargo.