Chinese refiners shift to Iraqi crude amid Iranian supply disruptions

Chinese independent refiners are pivoting to Iraqi crude oil as supply disruptions from Iran and high prices for Russian oil force a shift in their procurement strategy. The U.S. blockade on Iranian shipments, a major supplier, combined with fierce competition from state-owned refiners for Russian oil, has pushed private processors to seek alternative sources.

Refiners have secured November-delivery Iraqi Basrah crude at premiums reaching $18 per barrel over the ICE Brent benchmark. This buying spree is driven more by the need to avoid operational shutdowns than a surge in Chinese fuel demand, according to analysts.

Russian ESPO crude is currently trading at nearly a $30 premium per barrel over Brent, making Iraqi crude a more cost-effective option for price-sensitive private refiners. The shift highlights the challenges faced by independent refiners in securing affordable supplies amid geopolitical and market pressures.