- Iran produces 3.5 million barrels of oil daily, offering diverse crude grades for refineries
- Iran Light and Iran Heavy crudes cater to different refinery needs, with varying sulfur content
- Advanced refining tech boosts demand for Iran's heavy crude, making it commercially viable
Iran produces roughly 3.5 million barrels of oil per day. The US has been for decades trying to make sure no country buys it, but the customers kept coming to the Islamic nation in the Gulf.
The reason behind this will reveal itself by looking at what Iran has been actually selling.
Iranian crude comes in two main grades, called Iran Light and Iran Heavy. Each is tailored to different refinery configurations.
Iran Light, with an API gravity of around 33 to 36 degrees and sulfur content of approximately 1.46 per cent, yields high proportions of gasoline and diesel.
API gravity is a measure of how light or heavy crude oil is relative to water. The higher the number, the lighter the crude, and lighter crude generally costs less to refine into fuels like petrol and jet fuel. So, a higher API gravity means more value per barrel.
Iran Heavy, denser and more sulphurous, suits refineries built specifically for sour crude processing. This is the category that covers a substantial portion of Asia's oil refining infrastructure.
Iran's South Pars condensate sits at the other extreme end: ultra-light, almost entirely sulfur-free, so useful as a diluent that Tehran has been shipping it to Venezuela since 2020 to help Caracas thin its own heavy crude for export.
The range of oil grades that Iran has, from ultra-light condensate to medium-heavy sour crude, is something every oil producer in the world doesn't offer. This advantage is often drowned out by the noise over "sanctioned oil".
Iran's pricing is another strong factor behind the high demand for its oil. Iranian crude typically trades at a discount of $3 to $9 per barrel below Brent. With extraction costs as low as $10 per barrel, the margin for buyers is considerable.
For China's independent refineries in Shandong province, the decision has consistently tilted toward buying Iranian crude. These refineries, the so-called teapots, have been configured precisely for sour and medium-heavy grade crude.
China accounted for over 90 per cent of Iran's oil export revenues in 2024, buying some $32.5 billion worth of crude.
The figures indicate the ties between the two counties are built on margin, not sentiment. The infrastructure sustaining this trade has grown steadily more sophisticated. Western officials believe $8.4 billion in oil payments flowed through a covert oil-for-infrastructure network in 2024, where Chinese buyers made payments that were then sent to Chinese-backed construction projects inside Iran.
The shadow fleet has turned Western sanctions enforcement into a game of maritime hide-and-seek. Shadow fleet refers to ship-to-ship oil transfers in the waters off countries like Indonesia and Singapore, re-flagged tankers cycling through Pacific island registries, and cargo relabelled while the ship is still sailing.
There's also a structural reason why the demand for Iran's oil is high. Advancements in refining technology have made heavy, high-sulphur crude commercially more attractive than it once was. This has made Iran's historically less-prized heavy grades into a product that modern, deep-conversion refineries are specifically engineered to process efficiently.
What Iran offers, then, is not only cheap oil, but also discounted oil with real technical value delivered through a logistics network shaped by years of adversity. Analysts say this combination would be very difficult to replicate. For example, the oil giant Saudi Aramco may not sell at a $9 discount.
