Iran is now offering its crude oil to independent refiners in China at smaller discounts compared to Brent crude prices. Sellers are trying to get better prices for oil headed to the world’s largest crude importer, according to unnamed sources who spoke to Bloomberg.
China’s private refiners play a crucial role in buying Iran’s oil, which is under U.S. sanctions. This relationship benefits both parties. Iran can sell its oil, which most other countries avoid, while China’s independent refiners, known as “teapots,” receive cheaper oil.
Despite the U.S. re-imposing sanctions on Iranian oil in 2018, China has continued to purchase Iranian crude. Beijing has stated it does not comply with these unilateral sanctions.
However, sources indicate there has been a recent deadlock between Iranian sellers and Chinese buyers. Iran is now asking for $1 more per barrel for its crude compared to previous months.
Currently, Iran is offering Iranian Light crude at a discount of $3.50 per barrel below ICE Brent prices, and Iranian Heavy crude at about $7.50 per barrel less than Brent.
Chinese refiners have expressed uncertainty about the reasons behind the price increases from Iran.
The rising tensions in the Middle East and a possible Israeli response to a recent Iranian missile attack may have led Iran to seek higher prices. Additionally, it’s suggested that Chinese refiners might be requesting more oil ahead of a potential Israeli strike on Iranian energy facilities.
Recently, Iranian oil tankers were seen departing from Kharg Island, Iran’s largest oil export terminal, amid fears of an imminent Israeli attack on this crucial infrastructure.
Earlier this year, Iran and China also had disagreements over crude oil pricing. China’s independent refiners postponed their purchases of Iranian oil for February because Iran was asking for higher prices and upfront payments. Eventually, the dispute was resolved, and Iranian sellers agreed to the previous terms.
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