SINGAPORE, June 4 — Iranian oil prices slipped into discounts for the first time since April, while Russian crude premiums eased as traders cut prices to entice Chinese buyers amid sluggish demand.
Trade sources said that the drop in prices of Iranian and Russian crude in the world's top buyer is expected to weigh on oil revenues in Russia and Iran, which is also facing a United States (US) blockade that has severely reduced its exports.
Iranian Light crude cargoes are being offered at a discount of ¢50 cents to US$1 per barrel to the ICE Brent contract for delivery to China's eastern province of Shandong this month, three traders said, down from premiums of US$1 to US$2 in the past two months.
Shandong is home to independent refiners, also known as teapots, which are the main consumers of sanctioned oil.
Two sources said that the prices of Russian ESPO, another popular grade for independent refiners, have also weakened to a premium of about US$3 to US$4 per barrel over ICE Brent for June delivery, down from US$4 to US$5 per barrel last month.
"Buyers are not accelerating procurement even if supply is tight, because prices are still too high for teapots who are suffering great losses. Also, teapots are lowering run rates, so demand is also coming down," said Kpler's senior crude oil analyst Xu Muyu.
Faced with mounting losses from elevated oil costs and weak fuel demand, some of the independent refiners cut runs in May.
Kpler data indicated that in May, China's Iranian crude imports fell to 1.10 million barrels per day, the lowest since January 2025, while imports of Russian crude hit 1.04 million bpd, the lowest since August.
Iran crude exports, oil in transit falls
The weakness in Iranian oil prices comes despite a collapse in exports and lower overseas stockpiles.
Iran's crude exports in May hit a six-year low of 260,000 barrels per day, less than a fifth of the 2025 average at 1.67 million bpd, according to Kpler data.
OilX data showed Iran's crude oil export at 118,300 bpd in May, compared with the 2025 average of 1.88 million bpd.
Xu added that Iranian oil on water outside the blockade zone has fallen to about 79 million barrels from about 130 million in mid-April when the US blockade began.
