China refiners turn to Iraqi crude as US blockade squeezes Iranian supply - Bloomberg

 

Chinese independent refiners are increasingly buying Iraqi crude as a US blockade restricts shipments from Iran and competition from state-owned Chinese companies drives up the cost of Russian oil, Bloomberg reported on Tuesday.

Private refiners, including smaller plants in Shandong province, have bought Iraq’s Basrah Heavy and Basrah Medium crude for November delivery at premiums of as much as $18 a barrel over Brent, according to traders cited by Bloomberg.

The buying reflects an urgent search for replacement supplies rather than a broad recovery in Chinese oil demand, the report said.

At least 50 tankers, most carrying Iranian crude, are backed up along China’s coast as the US blockade seeks to pressure Tehran over the seven-month war. Iran had been supplying more than 1 million barrels a day to China’s independent refiners before the conflict, with discounted sanctioned crude helping support their margins.

Some Shandong refiners could exhaust inventories by the end of October, according to Kpler analyst Muyu Xu.

“To avoid shutting down or significantly cutting run rates, refiners need to secure alternative supplies as soon as possible,” Xu told Bloomberg.

The squeeze has pushed refiners toward higher-sulfur Iraqi grades that many had previously avoided in favor of cheaper Iranian crude and Russia’s ESPO blend.

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