China’s independent oil refiners are scaling back purchases of Iranian crude in favour of cheaper supplies from other Middle Eastern producers, putting fresh pressure on Tehran’s oil exports.

Refineries in Shandong province, one of China’s major refining hubs, have increased imports from Iraq, the United Arab Emirates and Qatar after those countries offered larger price discounts than Iran. The lower prices have made their crude more attractive to Chinese buyers.

Data from tanker-tracking firm Kpler showed China’s imports of Iranian oil fell to about 556,000 barrels per day in July, the lowest level since January 2023.

The decline comes despite Iran increasing crude production and exports during its interim agreement with the United States. Slower demand from China has led to more Iranian oil remaining in floating storage, with cargoes waiting at sea for buyers.

Energy traders say Iran may be forced to offer deeper discounts to regain its share of the Chinese market. More competitive pricing is expected to be introduced in the coming days as Tehran seeks to attract refiners back.

Analysts said the latest shift underscores how strongly Chinese independent refiners respond to pricing, especially during periods of volatility in the global oil market. If rival suppliers continue to offer cheaper crude, Iran could face further pressure on its export volumes and oil revenues.