Iranian Oil Keeps Moving to China as Hormuz Blockade Frays at the Edges

Chinese supertanker Yuan Hua Hu crossed the Strait of Hormuz on Wednesday after sitting stranded in the Gulf for more than two months, carrying nearly 2 million barrels of Iraqi Basrah Medium crude it loaded in early March. The vessel, operated by COSCO Shipping Energy Transportation and chartered by Sinopec's trading arm Unipec, exited alongside earlier departures by two other Chinese VLCCs — Cospearl Lake and He Rong Hai — which cleared the strait on April 11. The transit matters because it suggests Chinese commercial operators are willing to move again after the U.S. naval blockade imposed in mid-April choked Gulf flows. The bigger question for oil markets is whether the blockade can hold, or whether enough crude is slipping through to keep Iranian barrels competitive in Asian spot markets. The evidence so far points to leakage. The Iran-flagged tanker Huge loaded roughly 2 million barrels at Kharg Island in early April and passed through the strait around April 13 — the day the blockade began — with its transponder disabled for most of the voyage, according to a New York Times analysis. It briefly re-activated its tracker in early May near Indonesia's Lombok Strait, an unusual routing that avoids the busier Malacca passage. U.S. Central Command said the Huge was not considered to have evaded forces because it departed before full implementation. That explanation sits uneasily beside the seizure of the M/T Tifani on April 21, which also left before April 13. Maritime deception activity spiked 600% between April 19 and May 3, according to maritime intelligence firm Windward. Vessels are disabling AIS transponders, spoofing positions, sailing under false flags and conducting ship-to-ship transfers to obscure Iranian cargo origins. U.S. officials say more than 70 vessels have been intercepted. On May 6, a U.S. fighter jet disabled an Iranian tanker's rudder in the Gulf of Oman after it attempted to breach the blockade. American forces also seized the China-bound Majestic X carrying Iranian oil more than 2,000 miles from the Gulf in the Indian Ocean, extending interdiction well beyond the immediate chokepoint. Iran is running its own seizures. On May 8, Iranian state television reported the detention of the Ocean Koi, which it said was carrying Iranian oil and attempting to exploit regional conditions. The U.S. had sanctioned a vessel by that name in February for transporting Iranian fuel as part of the shadow fleet. Incidents near Fujairah escalated Thursday. A vessel anchored 45 miles northeast of the port was seized by unauthorized personnel and moved toward Iranian waters, the UK Maritime Trade Operations center reported. Separately, the Indian-flagged cargo ship Haji Ali sank off Oman after an attack sparked a fire; all 14 crew were rescued by Oman's coast guard. Against the military activity, Washington and Beijing are talking. The White House said Trump and Xi agreed during Beijing meetings that the Strait of Hormuz must remain open. Trump later posted a threat of renewed bombing if Iran does not accept terms including opening the waterway, while simultaneously suspending a U.S. effort to force safe passage. The contradictory signals leave the blockade's legal and operational perimeter genuinely unclear. For traders, the key variables are whether Chinese-flagged Iraqi crude can transit freely — the Yuan Hua Hu's passage tests that — and whether deception tactics are degrading the blockade's effective throughput faster than U.S. seizure rates can offset. Any confirmed resumption of large-scale Iranian flows into Chinese ports would compress the geopolitical risk premium. A further escalation near Fujairah, or the first confirmed sinking of a seized vessel, would move the other way.