China’s Iranian crude imports near record high again
China imported over 1.7 mbd of Iranian crude in June—just shy of the March record. But what’s different this time?
China’s seaborne crude imports rose to 10.6 mbd in June, up 11% m-o-m and 6% y-o-y, even as ongoing maintenance kept overall refinery throughput at the lower end of the seasonal range.
The increase was largely driven by strong inflows of Middle Eastern grades:
- Saudi crude imports climbed to a 30-month high near 2mbd, well above the 1.5bbd average seen in the first five months of the year, following aggressive cuts in May-loading OSPs.
- Imports from other non-sanctioned Middle Eastern suppliers—including Iraq, the UAE, and Oman—also rose moderately.
In contrast, imports from other regions declined, causing a pause in China’s crude stockbuild during the second half of June. Stocks had been rising by over 1mbd during April and May.
Onshore crude inventories (excl. underground SPR) reached a record 1.09 billion barrels in the week ending June 22, before easing in the following three weeks.
China’s crude inventories could pick up again in August, driven by the arrival of cargoes purchased in the wake of the recent benchmark price collapse.
Faster workarounds for Iranian oil—even as refinery demand slows
China’s imports of Iranian crude surged back to over 1.7mbd in June, rebounding from May’s low of 1.1mbd—even as run rates at Shandong’s teapot refineries continued to decline, and are expected to stay weak in July due to delayed maintenance.
The spike in flows was driven by geopolitical and logistical factors:
- The Israel-Iran conflict prompted Iran and affiliated traders to expedite crude movements east, away from potential strike zones.
- Iranian crude and condensate exports hit a record 1.9mbd in June, with crude loadings peaking at 2.5mbd during June 1–12—just before Israel’s strike—before falling to 1.2mbd over the next 10 days.
- Iranian crude on water remained elevated into July, with loadings rebounding to 1.7mbd again from late June.
- Ongoing US tanker sanctions are unlikely to halt Iranian oil flows, but they will continue to drive strong demand for “clean” tankers that can facilitate compliant STS operations.
Shandong’s onshore crude inventories rose by nearly 20mb in June—an increase that mirrors the rise in Iranian arrivals, especially since refinery crude consumption did not pick up.
What June data reveals is a faster and more flexible workaround to secure feedstock in the face of perceived supply disruptions. Unlike the sharp stockbuild seen in March—driven by restocking needs after a wave of US tanker sanctions since December—the latest surge was triggered by the unlikely prospect of a US-Iran nuclear deal, prompting an imminent spike in Iranian oil shipments and imports.
Now, with ample onshore and floating storage near China and no major disruptions in seaborne logistics, teapot refiners have greater leverage to negotiate deeper discounts. Delivered Iranian crude was offered at $4/b below Brent in July, compared to around $2/b in May.
