How China circumvents sanctions to buy Iranian oil

China’s imports of Iranian oil are on track to hit a record 1.75MB/d this month, Kpler data shows.

That will top the previous peak of 1.66MB/day set in October 2023, according to Kpler data stretching back to January 2013, and is nearly 50% higher than last month’s 1.24MB/day.

Deliveries in Rizhao and Dalian are significantly higher m/m, said Muyu Xu, an analyst at Kpler

“Chinese tea makers are seeing refining margins improve slightly, they now have a stronger motivation to increase production and therefore need more raw material,” she said.

Flows in Lanqiao/Rizhao and Dalian almost doubled m/m to 342k b/d and 132k b/d respectively.

We got an early glimpse of China’s record appetite for Iranian oil last week when Bloomberg reported that China imported a record volume of crude from Malaysia last month, indicating a renewed appetite for cheaper Iranian oil as refineries are experiencing lower margins due to the economic slowdown. .

The world’s biggest crude importer took 6.21 million tonnes from Malaysia in July, equivalent to 1.47 million barrels per day, or nearly three times the Southeast Asian nation’s average daily output through 2023 .

Why is this a key leading indicator? Because the seas off Malaysia have long been a hub for tanker-to-tanker transfers of crude oil and petroleum products designed to disguise their country of origin, particularly from Iran. Officially, China has not bought Iranian barrels since June 2022, according to government data. Unofficially, it buys record amounts.

Oil from Iran – which the US once claimed it was sanctioning – has become the cheapest option for Chinese buyers, even more so than Russia, and several independent refiners are seeking barrels from the OPEC producer to boost their margins, traders said. that participates in the market. Iranian Light was last offered at a discount of $6 a barrel to ICE Brent, they added, compared with a discount of less than a dollar for comparable Russian crude.

Importers registered in China’s Shandong province were the biggest buyers of Iranian crude — masquerading as Malaysian — accounting for more than 70 percent of the volume, according to customs data. Overall, eight Chinese regions, including Liaoning and Henan, took oil from the Southeast Asian nation, the most since October 2023.

By Zerohedge.com

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