Reuters Claims Lifting Iran Sanctions Would Impact Chinese Refineries
According to webangah News Agency, Reuters reported Monday night that the potential removal of U.S. sanctions on Iranian oil exports could severely impact China’s independent refineries—known as “teapots”—which have thrived by processing discounted Iranian crude, while also potentially lowering global oil prices.
The report notes that former U.S. President Donald Trump adopted a dual approach toward Iran: intensifying economic sanctions through his “maximum pressure” campaign while concurrently engaging in high-level nuclear negotiations. Trump recently claimed both sides were “very close” to an agreement.
Tho, nuclear talks between Iran adn Western powers have historically been complex, marked by repeated pauses and restarts, with Trump’s recent optimism met with widespread skepticism.
If a deal is reached, it would likely include lifting many U.S. restrictions on Iran’s oil industry—a move with profound implications for global energy markets.
the current sanctions regime began when Trump withdrew from the UN-backed nuclear deal in 2018. While these measures slashed Iran’s oil exports—its primary revenue source—they failed to achieve Trump’s promised goal of reducing them to zero.
Data from Kpler shows Iran’s exports plummeted from 2.8 million barrels per day (bpd) in May 2018 to just 150,000 bpd by May 2020 before recovering to ~1.65 million bpd in 2025.
China’s teapot refineries—small independents concentrated in Shandong Province with ~4 million bpd capacity (20% of China’s total)—became key buyers of sanctioned Iranian crude through deep discounts and covert shipping networks (“dark fleet”).
While Chinese customs data claims zero imports from Iran, Kpler estimates China absorbed 77% of Tehran’s 1.6 million bpd exports last year via ship-tracking technology—though this fell to ~50% in recent months due to new U.S. sanctions targeting Shandong facilities and port operators.
A sanction lift would allow stranded Iranian oil (currently at November-2023 highs onboard tankers) to flood markets quickly alongside production boosts: OPEC data shows Iran defied expectations by averaging 3.3 million bpd output in early-2024 despite Western pressure; analysts project +500k bpd within six months post-sanctions.
The consequences:
• Global prices (already down from $82/barrel peaks) face further downward pressure
• Teapot refiners operating at ≤50% capacity amid thin margins risk mass closures without cheap feedstock
• State-owned Chinese megarefineries may gain domestic market share
• Saudi Arabia faces renewed competition amid price wars
• The global refining sector emerges as an unintended beneficiary
