Oil in floating storage reached 56 million barrels, Kpler said, as exports continued to slide, falling to 417,000 bpd in July from 532,000 bpd in June. Oil in onshore storage stood at 55.5 million barrels at the start of this week. This is up by 11 million barrels since the middle of May, shortly before the expiration of the sanction waivers. Onshore inventories will likely continue to rise steadily as floating storage is running near capacity.

Meanwhile, Iranian oil is also pushing Chinese stockpiles higher. From 3.2 million barrels in mid-June, China's strategic petroleum reserve in the northeastern province of Liaoning has reached 6 million barrels to date.

China has become Iran's most important oil buyer following the removal of U.S. sanction waivers in May, Kpler also noted. In June, Iran exported oil and condensate to China at a rate of 174,000 bpd, of which two-thirds was loaded after the expiration of the sanction waivers. This month, shipments increased considerably to more than 360,000 bpd.

Turkey is also importing Iranian crude at a growing rate despite the risk of sanction violation action on the part of Washington and shipments to Syria are probably continuing although there is no full visibility on these, Kpler says, as Iranian tankers turn off their geolocation devices in the Mediterranean.