- Iran’s oil trade with China has stumbled amid a price dispute, Reuters reported.
- Iran wants to clip the previous discount of $10 a barrel to about $5 a barrel.
- The smaller discounts would hurt the profits of China’s “teapot” refineries.
Iran is cutting back crude shipments to China, demanding higher prices on December and January deliveries of Iranian Light crude, Reuters reported on Friday. The move has led to a stalemate between the two countries, and could squeeze profits of the “teapot” refineries in China.
Iran is lowering its discount of $10 per barrel of Brent crude which was decided in November, to about $5 or $6, traders familiar with the transactions told Reuters. And those discounts could be trimmed even more, sources told the outlet.
Brent crude was trading at $78.69 a barrel on Friday.
According to Reuters, the extent of the current cutbacks in Iranian exports to China are unclear. Sources said that at least one Chinese buyer accepted the higher prices, purchasing a cargo with a $5.50-$6.50 discount.
Iran’s price hikes could be a result of relaxed sanctions on Venezuelan oil. As those shipments now sail towards the US and India, the amount of oil available for Beijing has dwindled, pumping up prices and reducing China’s power to negotiate over price.