Iran crude premium hits $4 as US squeeze halts shipments to China

Iranian crude shipments to China have nearly stopped, pushing the price of Iranian oil from a discount to a premium of about $4 a barrel, according to traders cited by Bloomberg. China is the largest buyer of Iranian oil, accounting for over 80% of its crude exports in 2025, data from analytics firm Kpler shows. Private Chinese refiners, known as "teapots," are facing a supply crunch as loaded Iranian tankers remain stuck in the Persian Gulf and empty vessels are stranded outside the region.

Kpler estimates that about 40 million barrels of Iranian crude are stored in waters east of peninsular Malaysia, but only around 4 million barrels remain available for sale. The squeeze has intensified before a planned announcement by US Treasury Secretary Scott Bessent on what he called "the greatest coordinated economic isolation in history." The US has already sanctioned one of China's largest private refiners, Hengli Petrochemical, and Beijing has ordered domestic firms not to comply with the sanctions.

The higher crude costs add pressure on Chinese teapots already facing weaker demand due to rising electric vehicle adoption and higher benchmark oil prices. It remains unclear whether further US economic pressure will force Tehran to change course, though Bessent has pledged to target Iran's "every economic lifeline."