China as an importer of Malaysian crude is beginning to show renewed interest in cheaper Iran as they struggle with lower margins due to the economic slowdown.
The world's biggest crude oil importer took 6.21 million tonnes from Malaysia in July according to government figures released on Tuesday.
It is equivalent to 1.47 million barrels per day or almost three times the average daily production from Southeast Asian countries throughout 2023.
The ocean around Malaysia is often a hub for raw material products and foreign tanker shipping. Things like this often close the opportunity for other countries to expand trade activities, including Iran.
In general, China has not bought Iranian barrels since June 2022.
Oil from Iran is the cheapest option for Chinese buyers and they are looking for barrel producers from OPEC member countries to increase their potential margins.
Iranian Light was last priced at a discount of $6 per barrel in the ICE Brent graph compared to a discount of $1 less than crude oil from Russia.
Shandong Province, China which is Malaysia's largest buyer of crude oil recorded a contribution of 70% of the total exports.
In total, eight Chinese provinces including Liaoning and Henan are among those that have taken the most oil from Malaysia since October 2023.
