Iranian Light crude for June delivery to Shandong is now trading at discounts between $0.50 and $1 per barrel below ICE Brent. This marks a sharp reversal from April and May, when the same cargoes fetched premiums of $1 to $2 per barrel. Russian ESPO crude has faced similar pressure, with premiums sliding to $3–4 per barrel from the $4–5 range seen last month.

Chinese authorities appear to be softening their stance on production requirements as inventories remain high. The National Development and Reform Commission has indicated that loss-making private refiners may cut fuel output to 80% of their previous yearly average. With fuel stockpiles sufficient and export volumes slashed, the state planner is allowing these refineries to throttle processing rates to mitigate the impact of thin margins.