Investing.com -- Iranian oil sellers are offering larger discounts to Chinese buyers in July, as they aim to reduce stockpiles while independent refiners cut back purchases due to rising crude prices.

Iranian Light crude is now being sold at $3.30-$3.50 per barrel below ICE Brent for July deliveries, traders said. This represents a deeper discount compared to June’s approximately $2.50 discount.

The main Chinese purchasers of Iranian crude are independent refineries, commonly referred to as teapots. These buyers are currently facing financial pressure from a $10 per barrel increase in crude prices that has occurred since the Israel-Iran conflict escalated last week.

Teapot refineries located in China’s Shandong province are experiencing their worst financial performance of the year. According to consultancy Sublime China Information, these facilities are suffering average losses of 353 yuan ($49.15) per metric ton this week.

Operations at Shandong refineries have remained at low levels, running at only 51% of capacity as of Wednesday, June 18. This represents a significant decrease from the 64% capacity utilization recorded during the same period last year, according to data from Sublime.

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