Chinese refiners boost Iraqi and Qatari oil purchases amid drop in Iranian supplies

Chinese refiners are increasingly turning to Iraqi and Qatari crude oil to compensate for a sharp decline in Iranian supplies. According to traders, independent refiners in China have secured at least 12 million barrels of Iraqi and Qatari crude for October and November deliveries, with estimates suggesting total purchases could range between 15 and 20 million barrels.

The shift toward alternative supplies comes as China’s imports of Iranian oil dropped to approximately 590,000 barrels per day in September, the lowest level since January 2023. The volume of Iranian crude stored on tankers outside the blockade zone also fell to 45 million barrels, down from 100 million barrels in late July.

Iraqi oil, particularly Basra Medium and Basra Heavy crudes, has become a preferred choice for Chinese refiners due to its affordability and quick availability. Additionally, Chinese refineries purchased 3 million barrels of Qatari Shaheen crude for early November delivery. This move reflects the growing reliance on Iraqi and Qatari supplies as sanctions on Iranian oil disrupt traditional trade flows.

Despite the shift, Chinese refineries are facing narrowing profit margins, leading traders to lower offer prices to boost demand. Refinery operating rates in Shandong dropped to around 55% by the end of September, down from approximately 60% at the start of the month, according to consultancy data.