Iran suspends crude oil trade with China in push for higher prices, threatening global markets

In November, Iran was striking deals with China to purchase crude oil. During that period, China could buy oil from Tehran for $10 less per barrel than the market price - Reuters reported. However, this situation changed in December.

Iran has lowered discounts for Chinese buyers to $5-6 less per barrel of oil. In addition, some shipments have been put on hold. Reuters sources state that China is seeking to negotiate a reduction in oil prices. Nevertheless, they acknowledge that there is limited room for negotiation.

According to Reuters' calculations, Iranian oil constitutes 10% of the crude oil imports into China. Therefore, the suspended shipments might impact global prices and diminish Chinese refineries' profits. Interestingly, China saved billions of dollars by buying oil from Russia, Venezuela, and Iran at significantly reduced prices. These countries provide almost 30% of China's oil imports.

It should be noted that Bloomberg reported, citing data from Vortex Ltd. and Kpler, that Iranian oil was shipped to China under the guise of supplies from Malaysia.

Bloomberg explained further that according to data from the Chinese customs administration, imports from Malaysia to China peaked in December 2022. However, according to experts, such a scale was not achievable by this Asian country.

"In the first nine months of 2022, Malaysian exports were almost three times higher than the average daily oil production from the Southeast Asian country. The flows even surpassed those of OPEC giants, Iraq, and the United Arab Emirates", Bloomberg observed.

Vortex analysts believe there is a strong indication that it was Iranian crude oil. The additional barrels from Iran and Venezuela were most likely rebranded as oil from Malaysia and Oman.