Iranian crude prices slipped into discounts in China for the first time since April, while premiums for Russian ESPO crude also softened, as traders lowered prices to attract buyers amid weak demand from independent refiners in Shandong Province.
The price decline comes despite tighter supplies of sanctioned oil, highlighting the challenges facing both Iran and Russia as China’s teapot refiners struggle with poor refining margins and subdued fuel consumption.
For June deliveries, Iranian Light crude was offered at discounts of 50 cents to $1 per barrel against ICE Brent, compared with premiums of $1 to $2 seen over the previous two months. Russian ESPO crude premiums also eased to around $3 to $4 per barrel above Brent, down from $4 to $5 in May.
Market analysts said Chinese buyers have not accelerated purchases even as supply remains constrained, with refiners reducing operating rates due to mounting losses and weak domestic demand for refined products.
According to Kpler data, China’s imports of Iranian crude fell to 1.10 million barrels per day in May, the lowest level since January 2025, while Russian crude imports dropped to 1.04 million bpd, their weakest since August.
Iran’s crude exports also declined sharply, reaching a six-year low of about 260,000 bpd in May, according to Kpler, as a U.S. blockade continued to restrict shipments. Separate OilX data estimated exports at 350,000 bpd, significantly below the 2025 average of roughly 1.7 million bpd.
Meanwhile, Iranian crude stored on vessels outside the blockade zone fell to around 79 million barrels, down from approximately 130 million barrels in mid-April, reflecting reduced export volumes and tighter inventories.
The weakness in prices despite falling exports underscores the dominant influence of China’s sluggish demand, which continues to weigh on revenues for both Tehran and Moscow.
Traders and analysts expect buying activity to remain subdued in the near term unless refining margins improve and fuel demand recovers across China’s independent refining sector.
The developments highlight the growing pressure on sanctioned oil producers as weakening demand offsets the impact of tighter global crude supplies.