Chinese State Refiners Weigh Return to Iranian Oil Purchases After US Sanctions Waiver

China’s major state-owned oil refiners are evaluating the possibility of resuming purchases of Iranian crude following a recent US sanctions waiver, although abundant alternative supplies and weak domestic fuel demand are expected to limit their appetite for significant imports, industry sources said.

If completed, any purchases would mark the first direct acquisitions of Iranian oil by China’s state refiners since 2019, when Chinese energy giants Sinopec and PetroChina continued limited imports after the United States reimposed sanctions on Tehran’s petroleum exports during President Donald Trump’s first administration.

Sources familiar with the matter said both Sinopec and PetroChina are reviewing the practical requirements needed to restart trade with Iran, including banking arrangements, insurance coverage and shipping logistics. The discussions follow Washington’s decision this week to grant a waiver allowing international buyers to purchase Iranian oil and petrochemical products and settle transactions in US dollars after a recent agreement that helped bring an end to the US-Israel conflict with Iran.

Despite the easing of restrictions, industry officials cautioned that several obstacles remain. Questions persist over which financial institutions would be willing to facilitate transactions, while concerns also exist about Iran’s ability to provide sufficient shipping capacity for large-scale exports.

One industry source noted that global oil supplies remain plentiful, reducing the urgency for Chinese state firms to seek additional barrels from Iran. Exports from major Middle Eastern producers, including Saudi Arabia, Kuwait and Iraq, have increased in recent months, while shipments through the Strait of Hormuz are expected to recover following the easing of regional tensions.

Asian refiners have also secured alternative supplies from regions including West Africa, Brazil and Russia, helping offset disruptions caused by the recent conflict in the Middle East.

Data from tanker-tracking company Vortexa showed Iranian crude loadings rose sharply between June 19 and June 24, reaching approximately 1.6 million barrels per day. That compares with about 340,000 barrels per day during the first 18 days of June and roughly 370,000 barrels per day in May.

Even so, analysts said sluggish demand in China’s domestic market could discourage state refiners from increasing imports. Consumption of fuels and petrochemical products has softened, while refinery processing rates and crude imports have also declined.

For now, independent Chinese refiners, commonly known as “teapots,” remain the primary buyers of Iranian crude. These companies typically conduct business through intermediary traders and settle transactions in Chinese yuan.

Among China’s major refiners, Sinopec is viewed as the most likely candidate to resume purchases. Sources said the company has experienced tighter crude supplies and has relied on commercial stockpiles in recent months. Industry officials also revealed that Sinopec explored potential purchases under a previous sanctions waiver earlier this year but ultimately decided the available timeframe was too short to complete transactions.

Iran’s National Iranian Oil Company is reportedly preparing for renewed interest from Chinese state refiners and is expected to use Russia’s ESPO crude grade as a benchmark for pricing discussions in any future agreements.