China's Teapots Seek Iranian Oil at Lower Prices
By Reuters | 08 Apr, 2026

Armed with fresh import quotas from Beijing, China's independent refiners are eager to buy cargoes of Iranian crude at post-ceasefire prices to return to profitable operations.

Some Chinese independent refiners, armed with fresh import quotas from Beijing, have begun seeking prompt cargoes of Iranian crude after oil prices slumped on Wednesday, three trade sources said.

Brent crude futures dropped below $100 per barrel on Wednesday to the lowest since March 11, after U.S. President Donald Trump said he had agreed to a two-week ceasefire with Iran that was subject to the immediate and safe reopening of the Strait of Hormuz. [O/R]

The Chinese refiners, known as teapots, had largely stayed on the sidelines since the U.S.-Iran conflict broke out in late February, causing global oil prices to surge, while Washington temporarily waived sanctions on Russian, Iranian crude at sea erasing discounts for these cargoes.

"There are some inquiries this morning as Brent slipped into the $90s," a trader close to Iranian oil trade said.

A second trader said while there have been some inquiries few deals have been concluded so far as prices are still significantly higher than pre-war levels.

Offers for Iranian Light were at parity or slight premium to ICE Brent compared with a $10 per barrel discount before the conflict, traders said.

Russian oil has also flipped to a premium of about $8 per barrel from discounts previously, thanks to strong demand from Indian refiners.

The surge in crude costs, coupled with still-weak domestic fuel demand, had led independent refiners to plan run cuts in April. However, China's state planner last week urged them not to reduce processing rates below the average of the past two years, aiming to safeguard domestic fuel supply as state-owned refiners trim output.

Maintaining higher run rates at current margins would result in significant losses for teapots, trade sources said.

Shandong teapots' average refining losses stood at 143 yuan ($20.94) per metric ton throughout March till March 27, according to a note published by local consultancy SCI on March 31.

To encourage higher refinery runs, China on Friday issued a new batch of crude oil import quotas totalling about 55 million metric tons (401.5 million barrels) to independent refiners, according to trade sources and analysts.

However, details on each refiner's volume and how these quotas can be used remained unclear, refining sources said.

($1 = 6.8297 Chinese yuan renminbi)

(Reporting by Siyi Liu, Chen Aizhu, Florence Tan and Trixie Yap in Singapore; Editing by Kim Coghill)