About 52 million barrels of Iranian oil were sitting in floating storage, the most since May 2023, with roughly half of the volumes parked off Malaysia, data from shipping-intelligence firm Kpler showed.
The offshore build has nearly doubled from a month earlier, the data indicated, and has risen sharply from early-2025 levels as cargoes wait for buyers.
Traders said the backlog has widened discounts on Iranian grades such as Iran Light, in some cases to as much as $8 a barrel below ICE Brent, compared with around $4 in late summer.
Reuters reported this week that that China’s official crude imports from Indonesia have surged to levels far above what Indonesia actually exports, prompting traders and analysts to say the barrels are likely sanctioned Iranian oil being rebranded after ship-to-ship transfers near Malaysia.
They said Iran’s suppliers have long masked origins by labeling cargoes as Malaysian, but tougher scrutiny of Malaysian oil by banks and Malaysia’s clampdown on at-sea transfers have pushed dealers to use Indonesia as a new paper origin.
On Monday, Indonesia announced it will auction the seized Iranian tanker MT Arman 114 and its 1.245 million barrels of crude oil starting December 2.
Even with the relabeling shift, analysts cited by Reuters said most Iranian crude bound for China is still transferred between tankers off Malaysia, and Kpler estimates China has taken about 1.37 million barrels per day of Iranian or suspected Iranian crude this year, mainly via such transfers.
The accumulation comes as the global oil market is well supplied, with OPEC+ easing production curbs and non-OPEC producers adding output, pressuring prices this year.
Despite US sanctions, Iranian exports are still running at their fastest pace in years, leaving more barrels vulnerable to congestion when demand slows.
China remains the dominant buyer of Iranian crude, largely through independent “teapot” refineries that import discounted barrels.
Traders said many teapots have nearly exhausted the import quotas they need to bring in overseas crude, cooling their appetite for new Iranian shipments.
Recent USsanctions on Chinese firms and terminals accused of handling Iranian oil, including the Rizhao Shihua crude terminal, have further complicated offloading, forcing some tankers to divert to alternative ports.