WANA (Apr 10) – Independent Chinese refineries, commonly known as “teapots,” have purchased Iranian crude oil at a premium over the Brent benchmark, marking a significant shift in global energy markets following a temporary U.S. sanctions waiver and a sharp drop in global prices.

 

For the first time since 2022, at least two refineries in Dongying—the primary hub for independent refiners in Shandong province—acquired Iranian Light crude at prices roughly $1.50 to $2.00 per barrel above Brent. This represents a dramatic reversal from the $10-per-barrel discount seen prior to the recent military escalations involving the U.S. and Israel.

 

India Prepares for First Iranian Cargo in Seven Years

The price surge is driven by expectations that India is set to receive its first shipment of Iranian oil in seven years. This comes after Washington issued a temporary waiver on maritime sanctions for Iranian oil, citing the broader economic impact of the recent strikes against Iran. The prospect of increased Indian demand has tightened the available supply for Chinese buyers, further pushing prices into premium territory.

 

Market Dynamics and Post-Ceasefire Volatility

The rush for immediate Iranian cargoes intensified after Brent crude prices plummeted 13% to fall below $100 following the announcement of a ceasefire between Iran and the United States.

 

Trading sources indicate that refining margins for “teapots” have improved significantly as crude costs fell while domestic fuel prices remained high, encouraging them to seek immediate Iranian shipments. These cargoes are reportedly currently floating near the Chinese coast and are expected to be delivered within the month.

 

Furthermore, the surge in demand aligns with directives from China’s state planner, which last week urged independent refineries to maintain processing rates at no less than their two-year average to ensure domestic fuel security while state-owned refineries reduce production.