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China’s oil imports from Iran hit eight-month high
S&P Global Commodity Insights reported the development, adding that Iranian crudes, which are much cheaper than Russian ESPO crudes, have gained more popularity among independent refineries in recent months.
Iranian Oil Ministry’s press service, Shana, republished the report without commenting on the accuracy of the provided statistics.
The full text of the S&P Global Commodity Insights report is as follows:
China’s independent refiners, mainly in eastern Shandong Province, increased their Iranian crude imports by 4.3% in June to an eight-month high of around 6.1 million mt to cut feedstock costs and combat weak refining margins, according to sources and S&P Global Commodity Insight data July 4.
The volume was the highest since October 2023, when it hit 6.22 million mt, the data showed.
Iranian crude accounted for about 65.7% of the total feedstock portfolio of small-sized independent refineries in Shandong in June, compared with 54.2% in May.
June’s higher imports were mainly due to feedstock requirements of the independent refineries, which have been struggling with weak refining margins for most of 2024 so far, and are more selective with their feedstock, sources said.
Iranian crudes, which are much cheaper than Russian ESPO crudes, have gained more popularity among independent refineries in recent months.
“Other crudes are not [as cheap as] Iranian crudes,” said a trader source.
Early deals for August-arrival ESPO sold to China were heard at discounts of around 60-80 cents/b to ICE Brent, according to trade sources.
In comparison, Iranian Heavy was at a discount of around $9/b to ICE Brent on a DES Shandong basis, about $3/b lower than that of $5-$6/b for Iranian Light crude on the same basis, making it more attractive, especially under the weak margins, sources said.
More Iranian Heavy crude cargoes have been arriving in the Shandong market than Iranian Light crude, due mainly to the relatively lower prices, sources said.
Data from local energy information provider OilChem showed the monthly average margin at Shandong independent refineries, from processing imported crudes, fell 32.3% on the week to 83.5/mt July 4, amid high crude benchmarks coupled with lower oil product prices.