China oil route disrupted as US sanctions hit key Rizhao terminal

Three massive oil tankers have diverted from China’s main crude port Rizhao after President Donald Trump sanctioned the Rizhao Shihua Crude Oil Terminal for importing Iranian oil amid his renewed beef with the second-largest economy on earth, according to Bloomberg.

The terminal, located in Shandong province, manages nearly 10% of China’s total oil imports and is a vital hub for Sinopec, officially known as China Petroleum & Chemical Corp.

The sudden blacklisting, announced last week by Washington, has already started to reshape shipping routes and threaten production at several state-run refineries.

Two of the very large crude carriers, Spherical and New Vista, are now heading to Ningbo Zhoushan near Shanghai. The Spherical carries about 2 million barrels of Brazilian oil, while the New Vista holds 1.8 million barrels from Abu Dhabi.

The third vessel, Habshan, transporting 1.9 million barrels from Africa, has shifted toward Tianjin in northern China. All three ships had initially signaled Rizhao as their destination before the sanctions order was made public.

US measures hit Sinopec’s refining network

The Rizhao Shihua terminal, partly owned by Sinopec, connects to multiple refineries across Shandong through a long pipeline network. The blacklisting came after the facility was accused of handling shipments linked to Iran, a direct violation of American sanctions.

Data reviewed by Bloomberg reportedly shows that the terminal brought in over 1 million barrels per day of crude last year, with 189,000 barrels traced to Iran.

Analysts at Energy Aspects predict that the disruption could cut refinery runs by as much as 250,000 barrels per day, affecting operations at several key plants.

Sinopec’s Luoyang refinery, which processes around 200,000 barrels per day, is expected to take the biggest hit, given its heavy dependence on crude arriving through Rizhao’s pipeline. Other connected sites, like Yangzi and Jinling refineries, could also see short-term slowdowns as supply tightens.

“The main impact falls on state-run refiners that receive non-sanctioned crude through the terminal, as sanctioned oil accounts for less than 25% of the terminal’s crude imports,” said Emma Li, senior market analyst at Vortexa.

Tankers change destinations as rerouting accelerates

Bloomberg’s tracking data show that tankers began changing course immediately after the sanctions were announced. Early Monday, Spherical switched from Rizhao to Caofeidian in Hebei province.

Meanwhile, other vessels waiting offshore near Shandong have either turned off tracking signals or are now heading for Ningbo and Tianjin, avoiding any risk tied to the blacklisted terminal.

Unlike previous trade wars that targeted small independent “teapot” refiners, this round directly hits Sinopec, a state-owned energy giant that serves as China’s biggest oil importer.

As well as being routed to different ports, oil that was headed to Rizhao could also be offloaded onto smaller ships to be taken to Sinopec refineries along the Yangtze River that get their oil via the pipeline from the terminal in Shandong, Energy Aspects said in a note last week.

Traders are expected to reroute most cargoes to nearby ports in Zhoushan, Ningbo, and Tianjin, helping to ease the disruption but still slowing refinery throughput in the short term.

Energy Aspects also said that the overall effect on China’s oil demand should be temporary, as rerouting capacity expands and replacement berths are secured.

But the sanctions have temporarily removed a terminal responsible for nearly one-tenth of the nation’s oil imports, an abrupt reminder that geopolitical decisions in Washington can upend cargo movements across China’s coast overnight.

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