China’s Independent Refiners Turn to Iranian Crude as Venezuelan Oil Supply Dries Up

SINGAPORE: Chinese independent oil refiners have begun increasing purchases of discounted Iranian crude oil to compensate for a sharp decline in Venezuelan shipments, according to sources familiar with the matter.

The move comes after Venezuelan oil flows to China were disrupted following recent U.S. actions targeting the OPEC member’s energy exports. As deliveries from Venezuela stalled, Iranian crude stored in Asia has emerged as a key alternative for China, the world’s largest crude importer.

Industry sources said the drawdown of Iranian oil held in bonded storage facilities in China and on tankers has helped offset the loss of Venezuelan supply. Independent refiners, commonly known as “”teapots,” have been leading the shift, attracted by steep price discounts on sanctioned barrels.

Venezuelan shipments to China declined sharply from mid-December after the United States imposed a blockade on vessels carrying sanctioned cargoes. The campaign intensified after Washington announced it would assume control over Venezuela’s oil sales and revenues, assigning international trading firms Vitol and Trafigura to market a portion of the country’s crude. However, major Chinese buyers have remained cautious amid the new purchasing arrangements.

Traders said teapot refiners, most of which are based in eastern China’s Shandong province, have prioritized Iranian heavy crude and Pars grades over Venezuelan cargoes offered through Western trading houses, as well as alternative heavy crudes from Canada or Russia.

Sources added that Chinese refiners are seeking additional Iranian shipments for delivery later in February and March, citing price competitiveness as the key driver. Iranian heavy crude has reportedly been trading at discounts of around $12 per barrel to ICE Brent, making it one of the cheapest substitutes currently available on the market.

By comparison, Russian Urals crude has been offered at slightly narrower discounts, while Venezuelan crude marketed for later delivery has become significantly more expensive than earlier in the year.

Data from energy analytics firms show that China’s imports of Venezuelan crude have dropped substantially, accounting for roughly 4% of total seaborne imports in 2025. Floating storage of Venezuelan-origin crude in Asia has also fallen sharply in recent weeks as tanker departures slowed.

At the same time, inventories of Iranian oil stored on tankers across Asia have declined, reflecting increased uptake by Chinese buyers. Meanwhile, floating storage of Russian crude in the region has risen amid softer demand from other major importers.

The shift highlights how Chinese refiners continue to adapt their sourcing strategies in response to geopolitical pressure, sanctions enforcement, and price dynamics in the global oil market.