In November, China boosted its crude oil imports from Saudi Arabia and Iran while cutting back on shipments from Russia. This decrease in Russian imports was due to weak demand and new sanctions from the U.S. Independent refiners in China started buying discounted Iranian oil after receiving new import quotas, which could lessen China’s dependence on Russian oil. According to Kpler, China’s crude imports from Saudi Arabia hit 1.59 million barrels per day, the highest in five months, and imports from Iran reached 1.35 million barrels per day, the most in three months. Meanwhile, imports from Russia dropped to 1.19 million barrels per day. This decline is tied to lower purchases from state-run refineries and the independent refiners using up their quotas. It seems that the U.S. sanctions against Russia’s major oil firms, introduced about two and a half weeks ago, are beginning to take effect. Official data on China’s import sources will be available next week. Trading sources and analysts have noted that independent refineries are buying Iranian oil at substantial discounts from local storage after receiving new quotas. Interest in Russian oil continues to be low. We are seeing a familiar pattern in China’s oil purchases, similar to shifts in the late 2023 market. Independent refiners in Beijing are actively seeking the best prices to assist in a fragile economic recovery. The latest Caixin Manufacturing PMI for November 2025 is just above the expansion threshold at 50.1, making the push for discounted crude even more urgent. New U.S. measures to tighten sanctions enforcement on Russian and Iranian oil shipments are clearly having an impact, similar to previous instances. This geopolitical pressure is leading Chinese buyers to seek the lowest prices with the least risk of disruption. The price gap between Brent and Urals has widened by over $4 in the past month, now reaching about $23 per barrel. In the coming weeks, traders might look to profit from the growing price difference between sanctioned and non-sanctioned crude. This could mean buying Middle Eastern benchmarks like Dubai swaps while selling Russian Urals futures. The rising uncertainty also makes options trading, such as buying Brent straddles for February delivery, an appealing strategy. We will closely monitor the next official release of Chinese import quotas, as this will indicate the buying power of independent refiners. Satellite tanker tracking data will offer early insights into cargo flows from Russia compared to the Middle East. Any indication that Russian volumes are holding steady would prompt a reassessment of these positions.

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