Iran’s oil discount to China reaches its highest level in a year

According to Energy Press and quoted by Reuters, trading sources said that discounts offered for Iranian crude in recent deals with China have reached more than $8 below Brent, up from around $6 in September and $3 in March. Some buyers have even made offers as low as $10 below Brent to offset the risk of sanctions and potential problems unloading cargo at Chinese ports.
According to these sources, the market has been described as directionless and oversupplied. One China-based trader told Reuters: “There is too much supply and the market has no clear direction at the moment.”
Double pressure from sanctions on Asian buyers
In recent weeks, the United States, Britain and the European Union have imposed a new wave of sanctions on major Russian oil producers and several companies linked to Iran. The restrictions are aimed at increasing pressure on Moscow to end the war in Ukraine.
But the side effects have hit the Asian market; Where China and India, the two main buyers of Russian oil, have stopped some of their purchases. The interruption has caused a sharp drop in Russian oil prices and as a result, a buildup of unsold Russian cargoes alongside the high volume of Iranian oil supply.
Fear of sanctions, port shutdowns
New US sanctions on several Chinese refineries, ports and ships accused of trading Iranian oil have disrupted the transport chain and increased concerns among buyers, informed sources told Reuters.
This atmosphere of distrust has led to a kind of confrontation between buyers and sellers of Iranian oil in recent days, according to traders.