China’s independent “teapot” refiners are increasing their imports of Iranian crude from onshore storage and idling tankers after Beijing issued new import quotas.
According to the Bloomberg, these private refiners, which usually dominate China’s purchases of cheaper Iranian and Russian oil, had slowed buying in Q4 due to exhausted allocations and sanctions-related restrictions.
Despite the new quotas, demand is expected to remain muted through year-end because of weak refining margins, causing Iranian oil to accumulate at sea, currently over 54 million barrels—the highest in about two and a half years. Iranian crude is being sold at steep discounts, and China remains the largest buyer despite sanctions.