⚡️🇨🇳🇮🇷 — Chinese independent refiners — the smaller, mostly private “teapot” refineries concentrated in Shandong — increased purchases of Iraqi and Qatari crude for October–November delivery as Iranian supplies declined and Gulf exports through the Strait of Hormuz recovered. Traders said at least 12 million barrels were bought from Mercuria, Totsa and Trafigura, with one estimate at 15–20 million, at $12–$20/bbl premiums to ICE Brent on a delivered basis. Most cargoes were Iraqi Basra Medium and Basra Heavy, medium- and heavy-sour crude grades, bought by Hongrun Petrochemical, Qicheng Petrochemical, Qirun Petrochemical, Hualong and Chambroad; Hongrun and Shenchi also bought 3 million barrels of Qatar’s Al-Shaheen, another medium-sour grade, for early-November delivery. — Reuters

➡️ The shift reflects a substitution in feedstock rather than a normalisation of Iranian supply. China’s Iranian crude imports fell nearly 50% year-on-year in September to 590,000 b/d, while Kpler recorded 45 million barrels of Iranian crude in floating storage outside the blockade zone, down from 100 million in late July; its data also showed no Iranian crude exports in September. Iraqi crude has consequently become a key replacement reference for the independent refiners because of its prompt availability and relatively low cost. The $12–$20/bbl differential is a cargo premium over ICE Brent, the principal international crude-pricing benchmark.

➡️ The replacement carries a cost: Shandong refinery utilisation fell to about 55% at end-September from nearly 60% at the beginning of the month, while Horizon Insights estimated losses of 250–500 yuan ($37–$75) per tonne, versus profits of about 500 yuan/ton earlier in September. This indicates that recovering physical Gulf flows are not yet restoring pre-disruption refining economics, as higher crude acquisition costs and China’s fuel-price caps continue to compress margins.

⭐️ Follow @MaxOsintIntel