SINGAPORE, Nov 5 Reuters Discounts on Iranian crude oil sold to China are at their tightest in around five years as lower exports drive up prices amid concerns that Middle East tensions may disrupt supply, trading sources said.
The discounts are the narrowest since Chinese independent refiners, known as teapots, stepped in as buyers in late 2019, filling a vacuum left by the country39;s state refiners wary of sanctions reinstated on Iran by the United States a year earlier.
Higher prices or a reduction in Iranian oil flows, which make up 10 of China39;s crude imports, would depress already low production at independent plants and further squeeze their razorthin margins amid sluggish Chinese fuel demand.
Differentials for Iranian Light crude have firmed to a lessthan4 per barrel discount to global benchmark ICE Brent, with Iranian Heavy at minus 7, said four sources involved in or familiar with Iranian oil transactions.
Iran39;s oil ministry did not immediately respond to a request for comment.
A deal in the first half of October was priced at minus 3.80 on a delivered, exship basis DES for November arrival, said two of the people, declining to be named due to the sensitivity of the transactions.
A Decemberarriving shipment was heard offered last week at minus 3, said one of the people, a Shandongbased trading manager with an independent plant.
There are very few offers for November or December deliveries as we heard about loading issues on the Iranian side, the…