25 February 2026
China remains the main buyer of oil from two heavily sanctioned suppliers—Russia and Iran. To persuade its refiners to choose their crude, they are forced to lower prices. Russia’s discounts have been greater, leading it to begin displacing Iran.
Urals, previously primarily purchased by India, is now selling at a $12 discount to the benchmark Brent crude in Chinese ports, Bloomberg reports , citing traders familiar with the deals. In January, the discount was $10. (This figure takes into account transportation costs; barrels were shipped to Russian ports last week for $41.20-$43.20, according to Argus Media, or approximately $27-$29 cheaper than Brent.) Iranians have increased their discount to $11 per barrel, from $8-$9 in December, according to traders.
As a result, average daily Russian oil deliveries to Chinese ports rose to 2.09 barrels in the first 18 days of February, according to Bloomberg vessel tracking data. This is approximately 20% more than in January and 50% more than in December. Iranian deliveries, according to Kpler, have totaled 1.2 million barrels since the start of the year: they have remained more or less at this level for the third month, but are 12% lower than the same period in 2025.
Independent Chinese refineries, traditionally willing to purchase oil that other countries refuse, are the buyers of Russian and Iranian barrels. However, their absorption capacity is limited: they account for only about a quarter of the country’s refining capacity, and they are subject to government-imposed import quotas.
China’s major state-owned oil refineries have traditionally avoided Iranian oil, and have recently largely abandoned trade with Russia. Jianan Sun, an analyst at Energy Aspects, points to the accumulation of sanctioned barrels in both onshore and offshore storage facilities in China:
Private Chinese refineries cannot accept any more as their capacity appears to be exhausted.
As a result, the volumes of oil Iran and Russia are forced to store at sea, using tankers as floating storage, are growing. The volume of Russian oil stored at sea has remained at around 140 million barrels since December. This is approximately 60 million (65%) more than at the end of August, when the US doubled import duties on India, demanding it abandon Russian oil.
India continues to cut its purchases from Russia, with imports potentially falling by 40% to 600,000 barrels per day from January, according to a Rystad Energy scenario.
“The volume of Russian oil stored at sea has remained at around 140 million barrels since December. This is approximately 60 million (65%) more than at the end of August…”
That’s incredible. And, a huge ticking time bomb.
At any rate, the selling of mafia oil is something like selling snake oil. And the two buddies are in competition to sell their crap to the third buddy, who is laughing his arse off.
Be interesting to see which of these allies China buys oil from.
Is Putin selling his oil at a loss?
If not, it’s very close. But, I think so.