Iran Increases Oil Discount to China Amid Record-High Stocks at Teapot Refineries

The discount on Iranian crude sold in China has surged to more than $6 per barrel compared to Brent, as stocks at key import hubs of independent refiners have reached record highs, trade sources informed Reuters on Tuesday.

The discount for Iran’s crude for October loading has increased to over $6 per barrel compared to the ICE Brent price, up from $5 a barrel discount at the start of September and from a $3 per barrel discount in March, The Caspian Post reports citing foreign media.

The discount has widened even as fresh U.S. sanctions have hindered imports at some major oil import hubs in the province of Shandong, home to the independent Chinese refiners which have been relying on cheap Iranian crude supply.

So far this year, the U.S. has sanctioned several oil import terminals in China for receiving Iranian oil cargoes as the State Department expands sanctions against entities involved in trade with Iran. The U.S. is targeting with sanctions Chinese oil terminals and several independent refiners, the so-called teapots, which have struggled since then to procure the cheap Iranian oil.

The sanctions have reduced shipments to the sanctioned ports in recent weeks, according to vessel-tracking data cited by Reuters.

However, not enough government import quotas for the independent refiners and high stock levels at the import hubs are increasing the discounts for Iranian crude.

According to Vortexa Analytics, the onshore commercial crude stocks at Shandong hit a record-high of 293 million barrels as of August 22. That’s 20 million barrels higher compared to early July, per Vortexa data quoted by Reuters.

China continues to amass crude inventories at a rate of about 1 million barrels per day (bpd) in recent months, and could continue to stockpile crude throughout 2026 if oil prices hold at or below current levels, according to analyst estimates based on Chinese oil import, refining, and domestic production data.