Why Did an Iranian Oil Tanker Change Course from India to China?

In a surprising development, the Iranian oil tanker Ping Shun has changed its course from India to China, marking a significant shift in crude oil trade dynamics. Originally set to deliver Iranian crude to India for the first time in nearly seven years, the tanker now signals a destination in China. This change raises questions about payment terms and the future of Iranian oil imports for India, which had ceased since 2019 due to sanctions. As the geopolitical landscape evolves, the implications for both countries and the global oil market remain to be seen.

By Narendra Chaudhary Apr 3, 2026, 15:59 IST

Tanker Reroutes Mid-Voyage

In a surprising turn of events, a US-sanctioned tanker transporting Iranian crude oil has altered its course from India to China. This change comes just as it was set to make its first delivery to India in nearly seven years.

The Aframax tanker, named Ping Shun, which was built in 2002 and placed under US sanctions in 2025, is now indicating Dongying, China, as its new destination, instead of Vadinar in Gujarat, where it was originally headed, according to ship-tracking company Kpler.

It's important to note that the ship's Automatic Identification System (AIS) transponder may not reflect the final destination, as it could change during transit.

Sumit Ritolia, Lead Research Analyst at Kpler, stated, "An Iranian crude vessel 'Ping Shun' that had been en route to Vadinar, India, over the past three days has dropped India as its declared destination near arrival and is now signalling China."

This shipment would have marked the first Iranian crude purchase by India since 2019, as Indian refiners have been exploring opportunities to acquire Iranian oil following a recent sanctions waiver from the US.

Ritolia suggested that the change in destination is likely related to payment issues, with sellers tightening terms and moving away from the previous 30-60 day credit window to requiring upfront or near-term payments.

The identities of the seller and buyer involved in this transaction remain unclear.

Vadinar is home to a significant oil refinery operated by Nayara Energy, which has a capacity of 20 million tonnes per year and is backed by Russian oil giant Rosneft.

Ritolia further explained that while mid-voyage destination changes are not uncommon for Iranian crude, they underscore the growing sensitivity of trade flows to financial terms and counterparty risks.

He added, "If the payment issues are resolved, the cargo could still reach an Indian refinery. However, this situation highlights how crucial commercial terms have become in determining Iranian crude flows to countries other than China."

India's oil ministry has indicated that decisions regarding the resumption of Iranian crude purchases will be driven by techno-commercial feasibility.

Historically, India has been a significant buyer of Iranian crude, importing large quantities of both light and heavy grades due to favorable refinery compatibility and commercial terms.

However, following the tightening of sanctions in 2018, imports ceased in May 2019, with volumes replaced by oil from the Middle East, the US, and other sources. At its peak, Iranian crude constituted 11.5% of India's total imports.

In 2018, India imported 518,000 barrels per day of Iranian oil, which decreased to 268,000 bpd between January and May 2019 when the US granted waivers to select buyers. Since then, there have been no imports.

The primary grades that Indian refiners used to purchase included Iran light and Iran heavy crudes.

Last month, the US waived sanctions on the purchase of Iranian oil at sea for a period of 30 days in an effort to stabilize rising oil prices amid the ongoing US-Israeli conflict with Iran.

This waiver is set to expire on April 19. Currently, approximately 95 million barrels of Iranian oil are on vessels at sea, with around 51 million barrels potentially available for sale to India, while the remainder is better suited for buyers in China and Southeast Asia.

The Ping Shun is estimated to be carrying about 600,000 barrels of oil, which was loaded from Kharg Island around March 4, with a previously declared ETA to Vadinar of April 4, according to Kpler.

While the US waiver allowed for the purchase of these barrels, the payment methods remain uncertain.

Iran continues to be excluded from the SWIFT system, which is a global messaging network that facilitates secure financial transactions between banks and financial institutions.

The last purchases from Iran were conducted in Euros through a Turkish bank as an intermediary, but that option is no longer available.

Iran was disconnected from the SWIFT system in March 2012 due to European Union sanctions related to its nuclear program, which led to the disconnection of several Iranian banks and severely limited global financial transactions.

Further disruptions occurred in 2018 when the US reinstated sanctions, resulting in the renewed suspension of multiple Iranian banks from the network, significantly hampering Tehran's ability to engage in international trade, receive oil payments, and access foreign currency reserves.