Iranian Crude Oil Sold at Discount as Demand From China Weakens

05/06/2026

Iranian Crude Oil Sold at Discount as Demand From China Weakens

TEHRAN, Jun 5: Iranian crude oil prices have slipped into discount territory for the first time since April, as weakening demand from Chinese refiners offsets reduced supply caused by tighter US sanctions enforcement, according to market reports.

Iranian Light crude is currently being offered at a discount of around 50 cents to $1 per barrel against ICE Brent for shipments to China’s Shandong province this month, Reuters reported, citing traders. This marks a sharp reversal from the previous two months, when the same grade was trading at premiums of $1 to $2 per barrel.

Shandong province, home to China’s independent refiners known as “teapots,” remains a key destination for sanctioned Iranian oil. However, analysts say demand from these refiners has weakened due to poor refining margins and soft domestic fuel consumption. Several independent refiners have reportedly reduced operating rates as profitability comes under pressure.

“Buyers aren’t accelerating procurement even if supply is tight, because prices are still too high for teapots who are suffering great losses,” said Xu Muyu, senior crude oil analyst at Kpler. “Also teapots are lowering run rates, so demand is also coming down.”

The development highlights a growing imbalance in the Iranian oil trade, where supply disruptions linked to US sanctions have not translated into stronger prices, as weakening demand from key buyers continues to weigh on the market.