Iranian crude oil prices to China have risen to their highest level in years due to additional US sanctions that have affected shipping capabilities and raised logistics costs, traders and analysts said, according to Reuters .
Higher Iranian and Russian oil prices are increasing costs for China’s independent refiners, which account for about a fifth of demand in the world’s largest crude import market, highlighting potential challenges as President-elect Donald Trump’s administration is expected to increase pressure on Tehran when it takes office .
Traders said some refiners were turning to supplies not subject to sanctions restrictions, including from the Middle East and West Africa, to meet seasonal demand in the winter and ahead of the Lunar New Year .
Discounts for Iranian light crude have fallen to around $2.50 a barrel versus Brent on the Intercontinental Exchange on a free-on-board basis, compared with discounts of less than $4 in early November .
Traders said discounts on Iranian heavy crude had also narrowed to around $4-5 a barrel from around $7 in early November .
Iranian crude prices have been rising since October when the OPEC member’s exports fell following fears of an Israeli attack on Iranian oil facilities .
The sources and shipping data from the London Stock Exchange Group said that the tightening of sanctions by the administration of US President Joe Biden on Tehran last week led to the cessation of some ships carrying Iranian crude via other tankers to China off the coasts of Singapore and Malaysia .
China’s imports of Iranian crude and condensate in November fell by 524,000 barrels per day (bpd) to a four-month low of 1.31 million bpd from the previous month, ship-tracking data from Kpler showed .
Shipping data from the London Stock Exchange Group showed a number of very large crude oil tankers subject to sanctions were sailing off the coast of Malaysia .
The data showed that an oil tanker subject to sanctions set sail from China on Friday. The tanker unloaded its cargo at the port of Rizhao in Shandong province, trade sources said .
Analysts said Iranian oil prices were partly supported by recovering demand in China as independent refiners bought more crude after receiving extra import quotas from the government and slightly increased their fuel production.
