China’s independent refiners are increasing their imports of Iranian crude, both from onshore tanks and from ships waiting offshore, after Beijing issued a new round of import quotas late last month. Several refineries in Shandong province this week began withdrawing crude from bonded warehouses at ports and refineries, according to people familiar with the matter who requested anonymity because of the sensitivity of the issue. The people indicated that a large portion of these shipments were purchased before the new quota was issued. China’s private refiners, dubbed “teapots” after their designs, dominate the country’s purchases of Iranian and Russian crude, two sources that are cheaper than other grades. Also read: Iran intends to operate oil projects worth 3.7 billion euros. Purchases decrease due to sanctions. However, these companies were forced to reduce their purchases in the fourth quarter after exhausting their quotas and being affected by the sanctions. Beijing operates a quota system through which it controls how much oil non-state-owned refineries can import. However, orders from small, independent refiners are expected to remain weak through the end of the year, partly due to low refining margins, Vortexa said. You might be interested in: Iranian oil shipments piled up at sea hit highest level since 2023. Emma Li, the company’s chief China market analyst, said this means “sanctioned crude may remain aboard tankers at sea.” Distribution of Chinese quotas to independent refiners Chinese authorities usually provide guidance on the total annual quota, but usually do not disclose details of the payments spread over the year that make up the final total figure. According to analysts, around 20 small independent refineries received between 7 and 8 million tonnes in the latest allocation round. Ship tracking data compiled by Bloomberg showed that two giant oil tankers carrying Iranian oil and anchored off the Chinese coast unloaded their cargo at different Chinese ports this week. One of the two ships, registered under the Panamanian flag and named “El Gap,” unloaded about two million barrels of oil in the port of Rizhao. Neither the ship’s operator, Eversail Ship Services, based in Mumbai, nor its owner, Marshall Islands-registered Crystal Blue Sky, responded to emails seeking comment. None of them have been included on Western sanctions lists. The quantities of Iranian crude stored aboard tankers rose to more than 54 million barrels this week, the highest level in about two and a half years, according to Kpler data. China is the largest consumer of Iranian oil. China is the largest buyer of sanctioned oil from Iran, and is a member of OPEC. Tehran’s exports have recently risen at the fastest pace in years. Given the lack of potential buyers, Iranian oil must be offered at low prices. Some shipments of Iranian light crude were offered this week at a discount of between $8 and $9 a barrel compared with Brent contracts on the Intercontinental Exchange for around $4 in August, according to traders. Tightening of sanctions against Russia also lowered barrel prices. Also read: Trump: China can now continue to buy Iranian oil. Many Chinese refiners have exhausted their quotas at a faster-than-usual pace this year due to the tightening of the tax system on alternative materials such as fuel oil. Refineries have received their full annual quotas in advance since 2024 to facilitate planning, but this system often leaves them in a quota deficit situation long before the end of the year.