Chinese Oil Refiners Intensify Search for Iranian Oil Following Price Drop
On April 8, Chinese private oil refineries began actively seeking urgent shipments of Iranian oil after receiving new import quotas from the Beijing government, coinciding with a sharp decline in oil prices that has raised concerns among traders and market analysts.
On Wednesday, April 8, Chinese private oil refineries, having received new import quotas from the Beijing government, started actively searching for urgent shipments of Iranian oil. This development comes in the wake of a significant drop in oil prices, which has sparked concerns among traders and market analysts.
According to information published by Reuters, Brent crude oil futures fell below the $100 per barrel mark on Wednesday, reaching their lowest level since March 11. This decline followed a statement from U.S. President Donald Trump regarding a two-week ceasefire agreement with Iran, contingent upon the immediate and safe reopening of the Strait of Hormuz.
One trader specializing in Iranian oil trade noted, "Requests came in this morning as the price of Brent fell to $90." This indicates that the market is beginning to respond to new conditions and opportunities arising from changes in the political situation.
Traders also reported that offers for Iranian Light oil were at parity or with a slight premium to ICE Brent, whereas prior to the conflict, there was a discount of $10 per barrel. This suggests that the demand for Iranian oil is increasing despite the challenging situation in the region.
Prices for Russian oil have also undergone changes, shifting from previous discounts to a premium of around $8 per barrel, driven by high demand from Indian refineries. This underscores how global markets are reacting to shifts in demand and supply.
The publication noted that "the spike in oil prices combined with still weak domestic fuel demand has forced independent Chinese refiners to plan cuts in processing volumes for April." However, last week, Chinese authorities urged them not to reduce processing volumes below the average levels of the past two years to ensure domestic fuel supply, as state-owned refiners are cutting production.
To stimulate an increase in oil processing volumes at refineries, China issued a new batch of crude oil import quotas totaling approximately 401.5 million barrels to independent refiners on April 3. This decision aims to support the market and ensure supply stability.
At the beginning of April, prices for Russian oil surged to their highest level in over 13 years, as Moscow capitalized on the global rise in oil prices linked to the Middle Eastern conflict. However, despite this, oil prices fell by more than 10% on the morning of April 8 following news of a temporary halt in U.S. strikes against Iran.
In March, Russia began redirecting oil intended for China to India due to a sharp increase in demand from major Indian refineries. Meanwhile, prices for the key Russian Urals crude oil grade supplied to India reached record highs after the U.S. expanded its permit allowing countries to purchase Russian crude oil.