China’s Teapot Refiners Rush to Secure Iranian Crude as Oil Prices Slide.

China’s independent refiners are looking for prompt Iranian crude cargos after Beijing issued the latest batch of quotas for oil imports and after international prices took a plunge following the latest news about the war in the Middle East.

Brent crude and WTI are both down, below $100 per barrel, after President Trump announced a two-week ceasefire, with Iran saying it would ensure safe passage for tankers via the Strait of Hormuz. Amid these developments, the so-called teapot refiners are eager to stock up on Iranian crude.

The United States lifted sanctions on both Iranian and Russian oil following the oil price surge as U.S. and Israeli strikes on Iran prompted the latter to close the Strait of Hormuz. Prices are still much higher, despite today’s plunge, traders noted, with Iran Light offered at the same price as Brent crude or a slightly higher one.

Brent crude was trading at $94 per barrel at the time of writing, down from $110 on Tuesday.

The Chinese government last week issued an import quota for crude oil for a total of 55 million tons to independent refiners. Beijing has ordered the refining industry to keep producing fuels at the average run rates for the past two years to make sure there is enough fuel supply for the domestic market. Refiners, however, are suffering losses because of the elevated prices for feedstock. According to Reuters, the average losses for teapot refiners stood at almost $21 per barrel as of the last week of March.

China last month suspended fuel exports to shield itself from the worst of the fallout from the Middle Eastern war. At the end of March, however, the country delivered 260,000 barrels of diesel to the Philippines and 100,000 barrels of distillate fuels to Vietnam. Both countries were struggling with fuel shortages, as are other Asian nations.

Source: Oilprice