China is on track to set a new record for Iranian oil imports this month, with shipments expected to hit 1.75 million barrels per day (b/d), according to data from Kpler. This figure surpasses the previous peak of 1.66 million b/d recorded in October 2023 and is nearly 50% higher than last month’s 1.24 million b/d.
Muyu Xu, an analyst at Kpler, noted that imports into Rizhao and Dalian have significantly increased month-on-month. “With refining margins improving slightly, Chinese refineries are more motivated to increase production, which drives up their need for feedstock,” Xu said. Shipments to Lanqiao/Rizhao and Dalian have nearly doubled from the previous month, reaching 342,000 b/d and 132,000 b/d, respectively.
Recent reports have hinted at China’s growing demand for Iranian oil. Bloomberg revealed that China imported a record 6.21 million tons of crude from Malaysia in July, equivalent to 1.47 million barrels a day. This volume is almost triple the average daily production from Malaysia for 2023.
This surge in Malaysian crude imports is significant because Malaysia’s waters have long been used to transfer crude and oil products, often disguising the true origin of the oil, especially when it comes from Iran. Although official data shows that China has not purchased Iranian oil since June 2022, the country is still buying significant amounts through indirect routes.
Iranian oil, once heavily sanctioned by the U.S., is now the most cost-effective option for Chinese buyers, even cheaper than Russian oil. Traders report that Iranian Light crude was recently offered at a $6 discount per barrel compared to ICE Brent, whereas Russian crude was offered at a discount of less than $1.
Chinese importers in Shandong province are the primary buyers of this Iranian crude, which is often disguised as Malaysian oil, accounting for over 70% of the volume. Customs data shows that oil imports from Malaysia have been the highest since October 2023, with eight Chinese regions, including Liaoning and Henan, participating in these transactions.