Chinese independent refiners shift to Iraqi and Qatari crude as Iranian supplies shrink

Amid a slowdown in Iranian oil shipments, Chinese independent refiners turned to Gulf supplies, securing at least 12 million barrels of Iraqi and Qatari crude through Mercuria, Totsa and Trafigura. One trader estimated total purchases could reach 15-20 million barrels, with premiums of $12-$20 per barrel over ICE Brent on a delivered basis. The cargoes, mainly Iraqi Basra Medium and Heavy grades, were taken up by companies such as Hongrun Petrochemical, Qicheng Petrochemical, Qirun Petrochemical, Hualong and Chambroad Petrochemical.

This move follows earlier acquisitions of over 20 million barrels from West Africa, Canada and Colombia after a July U.S. naval blockade limited Iranian exports. Data from Kpler show Iranian shipments to China fell to 590,000 barrels per day, the lowest since January 2023, and vessel-stored Iranian crude dropped to 45 million barrels. Meanwhile, Chinese refiners face narrowing margins, with Shandong refinery utilisation slipping to about 55 percent and losses of 250-500 yuan per metric ton by late September.