Iranian crude prices slashed as more shipments exit Strait of Hormuz

Sellers of Iranian crude to China have slashed prices after the Islamic Republic started shipping out millions of barrels following the interim peace deal that with the US.

 

Spot cargoes of Iranian Light crude for July arrival are being offered by traders and middlemen at a discount of $2.50 to $5 a barrel to Brent benchmark prices, said people directly involved in the trade, who asked not to be named as the information isn’t public. That compares with a discount of around $1 offered before the deal. 

 

At least 11 tankers carrying a combined 20 million barrels were detected leaving the Iranian port of Chabahar in recent days, Bloomberg shipping data show. Iran also resumed loadings at Kharg Island — its main export terminal — after a roughly six-week halt under the US naval blockade, which was lifted as part of the interim deal.

 

 

That’s a sharp uptick from a few weeks ago, when the blockade prevented Tehran from bringing its oil to market, starving it of much-needed revenue. However, buying interest from China’s independent refiners — known as teapots — remains muted due to mounting losses and run-rate curbs. Additionally, US sanctions on an arm of Hengli Petrochemical over alleged Iranian purchases, which the company denies, also contributed to some wariness among buyers, the people said. 

 

China typically takes about 90% of Iran’s oil exports, a trade that’s proved to be remarkably sticky due to financing, logistics and other workarounds. On paper, however, the Asian nation hasn’t taken any Iranian crude since 2022 as shipments are often rebranded as Malaysian. 

 

About 121 million barrels of Iranian oil is still sitting on tankers in and around the Persian Gulf and elsewhhere, up 5% from the week before the peace deal, according to Kpler. About a quarter of that is idling off China or is in the Singapore Strait.