Record oil stockpiles in China drive Tehran to offer deeper discounts to maintain exports
Reuters, citing six trade sources, reported that the Iranian regime is selling oil at steeper discounts to smaller Chinese refineries as sanctions pressure mounts and Chinese stockpiles hit record levels.
According to the report, published Tuesday, September 16, crude inventories in China have surged to unprecedented highs. At the same time, import quota restrictions at the end of the year have tightened, forcing the regime to put its oil on sale at heavier discounts than before.
This week, the discount on Iranian light crude for October cargoes widened to more than $6 per barrel below Brent. Two weeks ago, the discount was about $5, and in March around $3. Record stockpiles in Shandong province have cut into refining margins for small “teapot” refiners, while limited import quotas issued by Beijing have further restricted purchases.
A source familiar with Iranian oil trading told Reuters that the bigger discounts also reflect Tehran’s attempts to offset sanctions-related costs for its buyers.
Earlier, tanker-tracking data showed, that Chinese imports of Iranian oil have surged to the highest levels since before Donald Trump returned to the White House in early 2025 and reactivated the so-called “maximum pressure” campaign.
Data from commodity intelligence firm Kpler shows that the volume of Iranian crude discharged at Chinese ports last month jumped sharply, indicating that the world’s largest oil importer is largely unmoved by U.S. efforts to restrict Tehran’s exports. The surge was so significant that Iran’s floating oil stockpiles in Asian waters—previously on the rise—were cut in half in just one month.
According to Kpler, Iranian crude imports discharged in China reached 1.68 million barrels per day in August, a 23 percent increase compared to July.
Reuters also noted that while Western sanctions target Iranian oil exports to curb uranium enrichment, weakening demand from Shandong’s independent refiners has intensified pressure on the regime to maintain its revenues.
U.S. sanctions have specifically targeted a key Chinese terminal. On August 21, Washington blacklisted the Hai Dongjiakou port in Qingdao, which previously received 130,000–200,000 barrels of Iranian crude per day. This was the sixth Chinese terminal sanctioned for handling Iranian oil. Sources told Reuters that the facility halted operations shortly after the sanctions took effect.
China remains the largest buyer of Iranian crude, purchasing over 90 percent of Tehran’s exports in recent years. Data from Vortexa Analytics shows China’s imports averaged 1.43 million barrels per day between January and August, up 12 percent from last year.
To bypass sanctions, traders often disguise Iranian shipments as Malaysian oil, conducting ship-to-ship transfers in waters near Malaysia. Beijing, however, has defended its purchases, claiming they comply with international law while rejecting U.S. unilateral sanctions as illegitimate.
According to Kpler’s senior analyst, Iranian crude imports at the Dongjiakou terminal fell by 65 percent in September. However, another terminal in the same port, Qingdao Xinhua, has not yet been sanctioned. Sources said that when ships are not blacklisted, cargoes can be redirected to nearby facilities.
Forecast data from Kpler suggests that imports of Iranian crude into Huangdao, another discharge hub in Qingdao, will reach 229,000 barrels per day in September—double the August level.
Meanwhile, commercial crude inventories in Shandong reached a record 293 million barrels by August 22, according to Vortexa. That figure is 20 million barrels higher than at the start of July, with Iranian oil making up a significant portion of the buildup.
