Reuters reported that Iran’s oil discounts to China have reached their highest level in more than a year. As the United States, the United Kingdom, and the European Union tighten sanctions against Russia and Iran, independent Chinese buyers facing a shortage of crude import quotas have reduced their purchases.
In recent weeks, the United States, the United Kingdom, and the European Union have imposed a new series of trade restrictions on major Russian oil producers and other industry players to pressure Russian President Vladimir Putin to end the war in Ukraine.
These sanctions have caused some Chinese and Indian buyers—two of Russia’s main oil customers—to halt purchases, leading to a sharp decline in Russian oil prices and an accumulation of unsold Russian shipments in a market already saturated with Iranian oil.
Iranian Regime Puts Iran’s Oil on Sale in China with Bigger Discounts
Reuters had previously reported on September 17, citing six trade sources, that the Iranian regime was offering larger discounts to small Chinese refineries.
According to that report, Iranian oil inventories in China have reached a record high. At the same time, import quota restrictions toward the end of the year have tightened, prompting the Iranian regime to auction its oil at even deeper discounts.
Disruptions in Shipping and Growing Concerns
The new measures build upon previous U.S. sanctions against companies accused of participating in Iran’s oil trade. Four Chinese refineries and several related ports and vessels are among those targeted.
According to traders, the combined effect of these sanctions has disrupted the shipping process and heightened buyers’ fears of breaching sanctions.
A China-based trader told Reuters that “supply is excessive, and the market lacks any clear direction.”
According to market data, Iranian light crude for December delivery is now being offered at more than $8 per barrel below the international Brent benchmark—compared with about $6 in September and $3 in March. Meanwhile, bids have fallen to roughly $10 below Brent, as buyers demand lower prices to offset sanction-related risks and potential unloading problems at Chinese ports.
Data from the analytics firm Kpler shows that Iran’s oil exports—which account for about 14% of China’s total crude imports—fell to 1.2 million barrels per day in September, the lowest since May and below this year’s average of 1.38 million barrels per day.
China’s government strictly regulates crude oil imports by independent refineries through a quota system. According to market sources, most refineries had nearly exhausted their 2025 quotas by the end of September and are now waiting for Beijing to allocate new quotas next month—a process that, in past years, typically occurred in November.
During his recent trip to China, Iranian regime president Masoud Pezeshkian claimed that “good agreements” were reached with the Chinese side.
