China’s teapots buy Iranian oil at premiums to Brent for first time in years, sources say
SINGAPORE, April 10 (Reuters) – Chinese independent refiners bought Iranian oil at a premium to Brent for the first time in years, amid falling benchmark prices and expectations that India could buy more cargoes after Washington temporarily waived sanctions.
India is set to receive its first cargo of Iranian oil in seven years after Washington temporarily waived sanctions on Iranian oil at sea due to the impact of the conflict in the Middle East.
Iranian oil is generally traded at a discount compared to Brent oil due to sanctions. Chinese independent refiners, also known as Teapots, are its biggest buyers.
At least two refineries in Dongying, a major hub for independents in eastern Shandong province, bought Iran Light at a premium of $1.50 to $2 a barrel from ICE Brent earlier this week, trading sources said. This compared to a $10 per barrel reduction before the conflict.
Sources said the cargo was floating near China and would be delivered this month.
One of the participants said he believes kettlebells are buying Iranian oil at a higher price than Brent for the first time since 2022.
Armed with new import quotas from Beijing, these refiners sought emergency cargoes of Iranian crude after Brent crude futures fell 13% to below $100 on Wednesday following the declaration of a war ceasefire.
The contract rebounded 1% on Thursday as traffic in the Strait of Hormuz was largely halted. [O/R]
Earlier this week, China raised retail ceiling prices for gasoline and diesel by 420 yuan ($61) and 400 yuan per metric ton, respectively.
Refining margins in teapots have improved as crude oil costs have fallen and domestic fuel prices have risen, prompting them to look to Iranian oil for quick delivery, traders said.
China’s state planner last week called on independent refiners not to reduce processing rates below the average of the past two years, seeking to protect domestic fuel supplies as state-owned refineries cut production.
(Reporting by Siyi Liu and Trixie Yap in Singapore; Editing by Florence Tan and Edwina Gibbs)
