The great oil U-turn: China 'steals' India's first Iranian crude cargo in 7 years

A mid-voyage U-turn by the sanctioned tanker 'Ping Shun' has diverted 600,000 barrels of Iranian crude from India to China. As the April 19 US waiver deadline nears, payment disputes appear to have blocked India's first Iranian oil import since 2019.

A US sanctioned Oil tanker carrying Iranian crude has made an unexpected, significant U-turn in its journey from India to China, according to ship tracking data. This drastic shift in direction means that India will not receive its first shipment of Iranian oil since almost seven years ago.

Unexpected turnaround

Ping Shun, an Aframax tanker built in 2002, has been under US sanctions since 2025, and it is currently carrying about 600,000 barrels of Iranian crude.

According to Kpler, a company that tracks shipping vessels, Ping Shun was headed for Vadinar, Gujarat, as its destination for the past three days.

As Ping Shun was approaching India’s coast, its automatic identification system (AIS) was suddenly changed to Dongying, China, as the destination. Vadinar is where there is a large 20 million tonne per year capacity refinery owned by Nayara Energy, which is backed by Rosneft.

Payment issues

Market analysts are speculating that the reason for the diversion of Ping Shun from India’s Vadinar to Dongying China was due to financial issues rather than logistical issues. Sumit Ritolia: Kpler's Lead Research Analyst said that it is likely attributable to a tightening of payment terms required by sellers.

"Sellers are moving away from the traditional 30–60 day credit window," Ritolia observed. "There is an increasing demand for upfront or near-term settlements, which likely triggered concerns for the intended buyer."

The mid-voyage modifications that are made by Iranian crude through the use of "shadow" trade demonstrate the extreme sensitivity of these types of transactions to counterparty risk and uncertain financial circumstances.

Washington granted a 30-day waiver from customary sanctions that would permit the purchase of Iranian oil that was presently on the water, which would allow for purchases of these barrels before the onset of sanctions.

The window for this waiver will close on April 19. Had the Ping Shun arrived at its destination in India, it would have been the first official importation from Iran since 2019 when, as a result of President Trump's "maximum pressure" efforts, New Delhi suspended its purchases during a period of waiver only until May 2019.

The pre-2018/2019 Iran India energy relationship

Prior to the sanctions imposed during the 2018-2019 timeframe, India depended on Iran to provide approximately 11.5% of all its crude imports and was the cornerstone of India's energy security. The Indian refining industry preferred to utilise "Iran Light" and "Iran Heavy" grades because they were competitively priced in relation to other grades and were compatible with India’s domestic refining capacity.

a. 518,000 bpd of crude oil was imported by India from Iran in 2018.
b. 268,000 bpd of crude oil were shipped from Iran to India in the early months of 2019, as imports from Iran were limited due to the waiver period.
c. By post-May 2019, only 67,000 bpd of crude oil were brought into India from Iran.

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