China’s teapots buy Iranian oil at premiums for first time in years
Iranian crude reaches India under waiver: Data
National oil exports jump 700,000 bpd
Two million barrels of Iranian crude reached India under a temporary US sanctions waiver while Chinese independent refiners purchased Iranian oil at premiums to Brent for the first time in years, marking a shift in Asian energy flows amid Middle East conflict disruptions, according to data and sources.
Chinese independent refiners, known as teapots, bought Iranian oil at premiums to Brent for the first time in years after benchmark prices fell and amid expectations that India might purchase more cargoes following Washington's temporary waiver of sanctions, according to Reuters.
India received its first Iranian oil cargo – two million barrels – in seven years after Washington temporarily waived sanctions on Iranian oil at sea due to the impact of the conflict in the Middle East, TankerTrackers data showed Friday.
The tanker-tracking platform did not provide vessel details but said the delivery was made possible under a sanctions waiver, Anadolu Agency reported.
The reported arrival came after the US Treasury's Office of Foreign Assets Control issued Iran General License U on March 20, authorizing transactions ordinarily necessary for the sale, delivery, and offloading of Iranian-origin crude oil and petroleum products loaded on vessels on or before March 20 this year, through April 19.
The license permits activities related to docking, anchoring, tug assistance, bunkering, inspections, pilotage, and discharge of covered cargoes, providing a temporary window for previously loaded Iranian oil shipments to complete delivery.
India announced last Saturday that it has resumed oil purchases from Iran, the first time in seven years, amid the ongoing armed conflict in the Middle East, which has disrupted energy supplies around the world, particularly in Asian countries.
This was the first public announcement by the South Asian nation since 2019, when it stopped importing oil from Iran after US waivers on the purchase of sanctioned Iranian oil were not renewed for buyers.
The development could mark a limited resumption of Iranian crude arrivals to major Asian buyers as war-related disruptions in the Middle East and shipping risks around the Strait of Hormuz continue to reshape regional energy flows.
Waivers granted to deliver Iran cargoes
With a view to speeding delivery of energy supplies from the Persian Gulf, India has recently granted waivers to allow two Iranian cargoes aboard an older tanker and another under international sanctions to enter its ports, two officials familiar with the matter said, Reuters reported on Thursday.
The world's No. 2 importer of liquefied petroleum gas (LPG), India is facing its worst gas crisis in decades, with the government rationing supplies to industry to ensure households are supplied with cooking gas.
India recently permitted the LPG tanker Aurora to dock in the southern port of Mangalore despite it being about 30 years old, one of the sources said. A crude oil tanker, the Jaya, despite being under US sanctions, was also permitted to unload, the other source said.
The officials said the approvals were being made on a case-by-case basis and only vessels meeting safety parameters were being considered for waivers.
Oil exports rise
CNN reported on Friday that Iran's oil exports have increased by 700,000 barrels per day following US military strikes on February 28, while crude prices have doubled.
According to Tasnim News Agency, citing CNN, the United States has negotiated a fragile ceasefire aimed at potentially reopening the Strait of Hormuz, but Asian allies dependent on the critical waterway have been forced to seek alternative energy suppliers — a shift that benefits Washington's primary rivals.
Following initial US and Israeli air strikes in February, Iran effectively closed the Strait of Hormuz, a chokepoint through which approximately one-fifth of global oil supplies transit.
Chinese teapots pay premiums
According to Reuters, China's teapots bought Iranian oil at premiums to Brent for the first time in years, sources said Friday.
Iranian oil typically trades at discounts to Brent because of sanctions. Chinese independent refiners are its biggest buyers.
At least two refiners in Dongying, a major hub for independents in the eastern Shandong province, purchased Iranian Light at premiums of $1.50 to $2 a barrel to ICE Brent earlier this week, trade sources said. That compared with a $10 per barrel discount before the conflict.
The cargoes are floating near China and will be delivered this month, the people said.
One of the people said he believed it was the first time since 2022 that teapots have bought Iranian oil at a premium to Brent.
These refiners, armed with fresh import quotas from Beijing, sought prompt cargoes of Iranian crude after Brent crude futures dropped 13% to below $100 on Wednesday following the announcement of a ceasefire for the war.
The contract rebounded 1% on Thursday as traffic through the Strait of Hormuz remained largely halted.
Earlier this week, China raised ceiling prices for retail gasoline and diesel by 420 yuan ($61) and 400 yuan per metric ton, respectively.
Refining margins at teapots have improved with lower crude costs and higher domestic fuel prices, encouraging them to look for Iranian oil for prompt delivery, traders said.