Chinese Refiners Force Price Cuts on Iranian Crude

The shift highlights the vulnerability of Iran’s export strategy, which relies on Chinese 'teapots' to absorb 90% of its sanctioned output. Just two months ago, these same buyers were paying a premium of two dollars per barrel. However, soaring input costs and high domestic fuel stockpiles have forced a change in behavior, prompting Chinese authorities to allow some refiners to scale back processing rates.

Russian suppliers are facing similar pressure. The premium for ESPO crude, a key alternative for Chinese refineries, has halved to three dollars over ICE Brent since May. With domestic inventories sufficient and fuel demand cooling, the era of paying top dollar for sanctioned crude has ended for China’s private sector. These refiners are no longer willing to absorb losses to maintain output, leaving exporters with little choice but to slash prices to move their cargo.