GreenergyDaily

Dec. 5, 2025

Chinese independent refiners are buying discounted Iranian crude held in onshore storage tanks using newly issued import quota to swiftly raise their output, trade sources and analysts said, easing a supply glut.

Stocks have built up in recent months after the refiners, known as teapots and mostly based in eastern Shandong province, ran out of import quota in October.

Last week, Beijing issued in advance the first batch of crude oil import quota for 2026 of about 8 million tons (58.4 million barrels) to 21 refiners, although one Chinese crude buyer said the volume is small enough that it would be exhausted by the end of this year.

Operating rates at Shandong teapots climbed to 61.3% in the week to December 3, after holding at around 50% in the previous months, according to Chinese consultancy JLC.

"With extra quotas, private refineries will raise runs and we have revised up our December China runs forecast by 150,000 barrels per day," said Energy Aspects senior analyst Sun Jianan.

Teapots are buying Iranian crude from bonded storage tanks because it takes only a few days to reach their plants, with some deals negotiated before the quota release, trade sources said.

One of them added that oil in storage was cheaper as cargo owners were looking to destock.