Reuters: Iran's Oil Exports to China Have Stopped

Reuters has reported, citing refinery and oil trade sources, that China's oil trade with Iran has halted. According to the report, Iran has stopped exports and is demanding higher prices from its major oil customer. The reduction in Iran's oil exports, which account for about 10% of China's crude oil imports and reached a record in October, could lead to reduced profits for Chinese refineries. Five traders informed Reuters that early last month, Iranian sellers told Chinese buyers they were reducing discounts on their light crude oil and would sell it five or six dollars below Brent prices in December and January. Discounts were set at around ten dollars per barrel in November. A trading manager based in China stated that it seems the order to raise prices has been issued from Tehran, as they are also preventing supply to intermediaries. A Chinese intermediary who buys directly from Iran said that Iran has halted exports of some shipments, creating a barrier between Chinese buyers and Iranian producers. By purchasing discounted oil from sanctioned producers like Iran, Venezuela, and recently Russia, which provide about 30% of China's crude oil imports, China has managed to save billions of dollars. Two traders told Reuters that at least one buyer has accepted higher price offers. This Shandong-based refinery purchased a shipment at a discount of between 5.5 to 6.5 dollars late last month. Reuters reported that discounts may decrease further, with the latest offer heard at 4.5 dollars. They say the average discount for last year for light crude oil was about 13 dollars. One buyer based in Shandong stated that options are limited and the Iranian side is 'very tough,' making it difficult to negotiate prices. Smaller independent refineries in China have become major customers of Tehran since late 2019, replacing state-owned refineries that stopped trading with Iran due to concerns over violating U.S. sanctions. Trade sources say these small refineries absorb about 90% of Iran's total oil exports, which are usually shipped via Malaysia or the UAE. Last month, China imported about 1.18 million barrels per day from Iran, down from 1.22 million barrels per day in November and 23% lower than the record 1.53 million barrels per day in October. A trading manager from an independent refinery told Reuters that Iranian officials aim to reach Russian prices but do not realize that the nature and scope of sanctions on Iranian oil differ from those on Russia. Since 2022, Washington has sanctioned over 180 individuals and entities linked to Iran's oil and petrochemical sectors and identified 40 vessels as blocked assets of sanctioned companies. Regarding Russia, the U.S. and its allies set a price cap of 60 dollars per barrel on Russian oil imports to punish Moscow following its invasion of Ukraine. India has mainly paid above 60 dollars for Russian oil, reaching 85.42 dollars in November, the highest since the imposition of restrictions by the G7 industrial powers. The increase in global oil prices coincided with the entry of the destroyer 'Alborz' into the Red Sea, while protests by oil workers in Behregan and Lavan occurred amid reduced concerns about disruptions in the Red Sea route. Environmental concerns are being sacrificed for oil; the risk of the destruction of the Hoor al-Azim wetlands under the pretext of developing oil fields.