Iranian oil slips to discount on poor Chinese demand despite tighter supply
Overview of Iranian and Russian Oil Prices in China
(Corrects OilX data in paragraph 12)
By Siyi Liu
Recent Price Trends and Market Reactions
SINGAPORE, June 4 (Reuters) - Iranian oil prices slipped into discounts for the first time since April, while Russian crude premiums eased as traders cut prices to entice Chinese buyers amid sluggish demand, trade sources said.
The drop in prices of Iranian and Russian crude in the world's top buyer is expected to weigh on oil revenues in Russia and Iran, which is also facing a U.S. blockade that has severely reduced its exports.
Discounts and Premiums for Iranian and Russian Crude
Iranian Light crude cargoes are being offered at a discount of 50 cents to $1 per barrel to ICE Brent contract for delivery to China's eastern province of Shandong this month, three traders said, down from premiums of $1 to $2 in the past two months.
Shandong is home to independent refiners, also known as teapots, which are the main consumers of sanctioned oil.
Prices of Russian ESPO, another popular grade for the independent refiners, have also weakened to a premium of about $3 to $4 a barrel to ICE Brent for June delivery, down from $4 to $5 last month, two of them said.
Impact on Independent Refiners ("Teapots")
"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, Kpler's senior crude oil analyst.
"Also teapots are lowering run rates, so demand is also coming down."
Faced with mounting losses from elevated oil costs and weak fuel demand, some of the independent refiners cut runs in May.
In May China's Iranian crude imports fell to 1.10 million barrels per day, the lowest since January 2025, while imports of Russian crude hit 1.04 million bpd, the lowest since August, Kpler data showed.
Iran Crude Exports and Oil in Transit
Sharp Decline in Iranian Oil Exports
IRAN CRUDE EXPORTS, OIL IN TRANSIT FALLS
The weakness in Iranian oil prices comes despite a collapse in its exports and lower stockpiles overseas.
Iran's crude exports in May hit a six-year low of 260,000 barrels per day, less than a fifth of the 2025 average at 1.67 million bpd, Kpler data showed.
OilX data showed Iran's crude oil exports at 350,000 bpd in May, compared with the 2025 average of 1.7 million bpd.
Stockpiles and Oil on Water
Iranian oil on water outside the blockade zone has fallen to about 79 million barrels from about 130 million in mid-April when the U.S. blockade began, Kpler's Xu said.
(Reporting by Siyi Liu in Singapore; Editing by Florence Tan and Clarence Fernandez)
