Iranian Light crude slated for July delivery was offered to Chinese buyers at a discount of more than $1 a barrel to ICE Brent, reversing a premium seen in the previous month. Traders say the cut aims to lure independent refiners, whose plants have throttled output as razor‑thin margins erode profitability, amid growing inventory pressures in Asia.

May shipments of Iranian oil to China slipped to 1.1 million barrels per day, the lowest level since January 2025, according to Kpler data. Around 56 million barrels now sit idle on tankers, with more than 60 % moored in the Singapore Strait and off China. Washington has intensified sanctions on the trade, most recently naming Hengli Petrochemical as a target. The slowdown threatens Tehran's export revenues.

Russian ESPO crude also saw its premium shrink to $3 above ICE Brent as Chinese teapots showed little appetite, down from a $6 spread a month earlier. The twin price trims underline weakening demand for sanctioned oil and signal tighter profit margins for refiners that rely on discounted supplies. With over 56 million barrels stranded, sellers face mounting pressure to move stock. Refiners may seek alternative feedstocks to protect margins.