Why has Iran slashed its crude oil prices for Chinese buyers, and what does this indicate about market conditions?

Iran has slashed its crude oil prices for Chinese buyers—offering Iranian Light at a discount of more than $1 a barrel to ICE Brent, reversing last month’s premium—to entice independent refiners whose operating rates have been reduced to stem losses from weakening refining margins. This price cut reflects softening demand and mounting economic pressure on China’s teapot refiners, who are the biggest buyers of Iranian crude but are now facing razor-thin, increasingly negative margins.

What is the current status of Iranian oil flows to China, and where is much of Iran’s unsold crude currently located?

Flows of Iranian oil to China fell to 1.1 million barrels a day in May—the lowest since January 2025—according to Kpler Ltd. data, while nearly 56 million barrels of Iranian crude are currently idling on vessels globally, with over 60% of those ships anchored in the Singapore Strait and off China’s coast.

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