Iran is holding back some supplies as it seeks higher prices for crude oil it sends to China, its biggest customer, Reuters reported on Friday, citing trade and refinery officials.
Even after the US reimposed sanctions on Iranian oil in 2018, China continues to buy cheap crude oil from Iran.
However, Iran is now reportedly seeking a reduction in the discount it offers to Brent for crude oil supplies to China, leading to an “stalemate” between Iran and Chinese customers.
Iran is seeking a discount of $5 to $6 a barrel for December and January light crude compared to Brent dates, oil trade sources told Reuters. The December and January deal was agreed in November at a price of about $10 a barrel below Brent.
A trading company executive based in China told Reuters it was unclear whether Chinese refiners would accept the new price.
At least one independent refiner based in Shandong province accepted the higher price and bought cargo at a narrower discount in late December, trade sources said.
“Buyers are still having trouble finding a solution because the new price is too high,” said a Chinese buyer based in Shandong province.
“But their options are limited and the Iranian side is very assertive, so the room for price negotiation is difficult and not favorable to Chinese buyers.”
Rising prices for Iranian oil will squeeze profit margins for independent refiners, which have not hesitated to buy supplies from Iran even after the reimposition of U.S. sanctions. Additionally, rising Iranian oil prices for Chinese customers could narrow the possibility of cheap crude supplies for the world’s largest oil importer, which saves billions of dollars by buying sanctioned crude. There is also.
A Reuters analysis last year estimated that China saved $10 billion in oil imports from January to September 2023 as it imported record amounts of cheap crude from Russia, Iran and Venezuela ( All three countries are under US and Western sanctions).
Written by Tsvetana Paraskova, Oilprice.com
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