Discounts on Iranian crude sold to China have widened to their steepest levels in over a year as tougher Western sanctions on Iran and Russia disrupt logistics and discourage independent refiners already struggling with limited import quotas, Reuters reported on Wednesday.
According to trade sources who declined to be named due to commercial sensitivities, offers for Iranian light crude have dropped to more than $8 a barrel below benchmark ICE Brent for December delivery, compared with about $6 in September and $3 in March.
Bids have fallen even lower -- to discounts near $10 per barrel -- as buyers seek to offset sanctions risks and possible delays at Chinese ports.
The slide follows a fresh wave of US, UK and EU sanctions targeting Russian and Iranian energy networks, including several Chinese refiners, ports, and shipping firms accused of moving sanctioned oil.
The measures have compounded uncertainty for Chinese “teapot” refiners, many of whom have run out of crude import quotas for 2025, reducing purchases ahead of expected new allocations in November.
Oversupply and sanctions overlap
The new Western sanctions have also hit Russian producers, prompting some Chinese and Indian buyers to pause purchases and pushing additional Russian barrels into the spot market, further weakening prices for Iranian grades.
The overlap has created what traders described as a “buyers’ standoff” with sellers unable to move cargoes quickly.
"There was just too much supply, and the market is directionless," a China-based trader told Reuters.
Iranian crude exports -- around 14% of China’s total imports -- fell to 1.2 million barrels per day in September, down from an average of 1.38 million bpd this year, according to data from analytics firm Kpler.
Beijing’s independent refiners have turned into Iran’s lifeline buyers, often processing oil delivered via a network of ship-to-ship transfers and rebranded cargoes that obscure origin and ownership.
A Reuters investigation this week traced parts of this “shadow fleet” to a New Zealand insurer, Maritime Mutual, accused of covering vessels carrying Iranian and Russian crude under false identities.
The report said the insurer’s clients had moved at least $18 billion worth of Iranian oil since 2018, highlighting how Tehran has maintained exports despite sanctions.
Tehran defies restrictions
Iran’s oil ministry continues to reject Western restrictions as “illegal,” vowing to sustain exports to China and other Asian markets.
Nearly 90% of Iranian oil shipments are now believed to go to China, much of it through ship-to-ship transfers and offshore storage, according to Western and industry estimates.
Earlier this month, the US Treasury imposed sanctions on more than 50 individuals, entities and vessels tied to Iran’s petroleum and gas trade, marking the fourth round of such measures under President Donald Trump targeting Chinese refiners still buying Iranian crude.
With official trade channels shrinking, Tehran has also been reported to accept Chinese weapons and infrastructure projects as payment in barter-style arrangements designed to sidestep banking restrictions.
Demonstrations were reported in cities including Zanjan, Tabriz, Tehran, Esfahan, Gilan and Fars, with participants chanting slogans that reflected both economic hardship and political frustration, lapse in their pay and benefits.
In Zanjan and Tabriz, retirees gathered outside government buildings, chanting: “People's rights must be settled,” and “Yesterday's warriors are today's claimants. Yesterday's fighters are today's rights-seekers.”
The term “warriors” refers to veterans of the eight-year Iran-Iraq war, many of whom now face financial insecurity.
Iran’s Intelligence Ministry issued a confidential warning in August, anticipating serious fallout from the potential return of UN sanctions under the snapback mechanism.
In Tehran and Esfahan, protesters voiced anger at financial mismanagement, shouting: “The major shareholder devoured our rights,” and “Don't delay—settle our dues today.”
Some chants directly challenged official narratives, with demonstrators declaring: “Our enemy is right here; they lie that it's America.”
In Gilan and Fars provinces, retirees accused both parliament and the government of deceiving the public. “Parliament and government both lie to the nation,” one group chanted, while another called out: “Cry out against this endless injustice!”
Price hike on rise
The protests come amid a sharp rise in consumer prices following the reactivation of UN sanctions by European powers last month. Basic goods have become increasingly unaffordable for many Iranians, particularly those on fixed incomes.
A grocer in Tehran shared a video showing his dwindling stock of rice, lamenting the price rise: “Top-grade Pakistani rice was 14.5 million rials ($13) before. A month later, it hit 21 million rials ($19). How can a head of a family with monthly income of 20 million rials ($18) could afford just for rice?”
Iran’s minimum monthly wage for 2025 stands at 104 million rials ($96), leaving many unable to cope with the rising cost of living.
Another woman posted a video comparing rice prices year-over-year: “This rice cost 11 million rials ($10) last year. Now it’s 33 million rials ($30). Khamenei, for 46 years you chased missiles, war, death to this and that, conquering this and that peak. Today, every calamity you inflicted is boomeranging on you.”
In another clip, a woman displayed two plastic bags of fruit—bananas, oranges, apples, and grapes—costing 20 million rials ($18). She narrated a comparison during the video. “In 1977, a Mercedes Benz coupe was 4 million rials (equal to $3 now). Now I pay this amount for fruit that vanishes in two days.”
A man driving through Tehran recorded a video responding to Interior Ministry claims that there has been no “visible shock” to the economy due to reimposition of UN sanctions.
“Want to see shock? Check the commodity basket. You're unfit to run the country. You must go. Islamic Republic corruption must end so someone honorable can govern.”
Meanwhile, an Iranian health official warned last week that about 120,000 Iranians die each year from nutrition-related causes, as rising food prices and declining consumption of staples such as dairy, meat, fruits and vegetables deepen the country’s public health crisis.
According to Reuters, Maritime Mutual, based in Auckland, is alleged to have provided insurance to dozens of tankers that carried Iranian crude under false identities through ship-to-ship transfers and falsified records.
Police searched the company’s offices in Auckland and Christchurch on October 16 as part of a financial crime investigation into possible sanctions violations, the report said.
The insurer, run by British national Paul Rankin, is reported to have covered vessels belonging to Iran’s so-called “shadow fleet,” tankers that disguise their ownership and routes to move sanctioned cargo. Ships insured by Maritime Mutual have carried at least $18 billion worth of Iranian oil since 2018, Reuters said.
Documents reviewed by Reuters showed that vessels insured by the company often disabled tracking systems or sent fake coordinates, a tactic known as “spoofing,” to conceal their movements.
Maritime Mutual said it “categorically denies” breaching sanctions and keeps a “zero-tolerance policy” toward violations. It said it operates under “rigorous compliance standards designed to ensure full adherence to all applicable laws.”
Shiraz Marine connection in Iran
Reuters reported that Shiraz Marine, an Iranian shipping company, described itself as a representative of Maritime Mutual.
A letter posted on Shiraz Marine’s website, bearing what appeared to be Maritime Mutual’s logo and the signature of company founder Paul Rankin, said the Iranian firm could promote the insurer’s interests.
Shiraz Marine later referred to itself on social media as the “official representative of the New Zealand P&I Club (MMI) in Iran,” Reuters said.
Shiraz Marine did not respond to Reuters' questions about the matter.
Maritime Mutual’s revenues rose sharply after US sanctions on Iran and Russia tightened.
Company filings showed average annual revenue growth of 41 percent from 2019 through 2024, reaching $108.5 million last year, up from $14.2 million in 2018.
Revenue growth peaked at 60 percent in 2023, the first full year after Western sanctions on Russian energy exports took effect, Reuters said.
Analysts told Reuters that the shadow fleet remains crucial to Tehran and Moscow’s ability to sell oil abroad despite sanctions.
Protection and indemnity coverage from insurers such as Maritime Mutual allows these ships to enter ports and conduct trade that might otherwise be blocked.
“Without that they’re dead in the water,” said David Tannenbaum, director of sanctions consultancy Blackstone Compliance Services, commenting on Reuters’ findings.
Iran and China oil ties
Tehran has long rejected Western sanctions as illegal and vowed to maintain its oil exports despite restrictions.
The investigation coincides with evidence of sustained Iranian oil flows to China. The Wall Street Journal reported earlier this month that Beijing funnels billions of dollars to Tehran through a covert payment system that swaps oil for infrastructure projects.
The report said around 90 percent of Iran’s oil exports now go to China, much of it transferred between ships at sea to obscure origin and destination.
Data cited by Iran International showed Iranian crude shipments to China rising to 1.68 million barrels per day in August, their highest level since before the Trump administration reimposed sanctions.
Earlier this month, the US Treasury announced sanctions on more than 50 individuals, entities, and vessels linked to Iran’s petroleum and liquefied gas exports, saying the move aimed to “degrade Iran’s cash flow” and disrupt funding for militant groups. Treasury Secretary Scott Bessent said the action marked the fourth round of measures under President Donald Trump targeting China-based refiners that continue to buy Iranian oil.
Ahmad Moghadasi, chairman of Iran’s Cattle Farmers Association, told state media that provinces including Tehran, Alborz, Qazvin, Qom, and Markazi have reported widespread infections, including among vaccinated herds.
“Even herds that were immunized have been struggling for over three weeks without recovery,” he said, blaming the introduction of a new SAT1 African strain of the virus.
He warned that the epidemic, coupled with the near-total halt of government feed distribution, has left dairy farms facing critical shortages.
“No feed is available in the agriculture ministry’s online system,” Moghadasi said. “Farmers are forced to buy on the open market, where corn costs 360,000 rials (about 33 USD cents) per kilo and soybean meal 400,000 rials (about 37 cents) -- double official rates.”
The government had set a purchase price of 230,000 rials (about 21 cents) per kilo for raw milk, based on subsidized feed costs, but the official system has failed to deliver supplies, Moghadasi added. “The government has not met its commitment, so input prices and milk prices are both rising,” he said.
Foot-and-mouth disease (FMD), a highly contagious viral infection affecting cloven-hoofed animals, has been reported in 270 locations nationwide, according to Iran’s Veterinary Organization.
Its head, Alireza Rafieipour, said more than 36 million animals have been vaccinated this year, adding that the situation remains under control with intensified quarantine and disinfection measures.
Industry groups, however, warn that recurring outbreaks and rising production costs are exacerbating Iran’s dairy crisis.
Domestic milk output and consumption have both declined amid inflation and poverty, with the Health Ministry reporting this month that per capita dairy intake has dropped to less than half the recommended level.
Officials blame soaring prices, reduced subsidies, and the lingering impact of US and UN sanctions on feed and veterinary imports.
The Agriculture Ministry has promised to stabilize supplies and maintain sufficient vaccine stocks, but farmers say they face mounting financial strain. “We are witnessing conditions similar to 2012 and 2018, when sanctions caused widespread drug and feed shortages,” according to Moghadasi.
According to the UN Food and Agriculture Organization, Iran’s per capita dairy consumption fell from 101 kilograms in 2010 to 70 kilograms in 2023, less than half the global average, reflecting a deepening food security crisis as inflation erodes purchasing power.
