Chinese refineries are accelerating their purchases of Iraqi crude oil to bridge supply gaps from Saudi Arabia and ADNOC, while Iraq increased its exports through the Strait of Hormuz to around 2 million barrels per day in August.
On August 20, 2026, at 09:50 AM, Bloomberg News reported that Chinese oil refineries are accelerating their purchases of crude oil from Iraq after the amount of oil that can be transported out of the Persian Gulf increased. This reflects the continued viability of oil exports from the Middle East region, despite the prolonged war with Iran and the high risks to shipping through the Strait of Hormuz.
Sources within the oil trading group reveal that Rongsheng Petrochemical, a major independent refinery in China, along with some state-owned refineries, have purchased at least 8 million barrels of Iraqi Basrah crude for near-term delivery, and the final volume could be higher as negotiations for further purchases continue.
This move comes as crude oil continues to be transported out of the Persian Gulf, even though the Iran-Iran war has not ended. Some oil tankers are choosing to disable their transponder systems while navigating the Strait of Hormuz to reduce security risks.
Last week, executives at Iraq's state-owned oil marketing company revealed that the country's oil exports through the Strait of Hormuz increased to approximately 2 million barrels per day in August.
The oil being shipped to China consists of Basrah Heavy and Basrah Medium crude, with sellers including China's CNOOC and several global commodity trading companies.
Sources indicate that some Basrah Medium oil was sold at a premium of less than $10 per barrel compared to the Dubai benchmark price, a price that included shipping costs to the destination.
Several energy companies and oil traders are playing a role in bringing Iraqi oil to the global market, including Vitol, TotalEnergies, and Abu Dhabi National Oil Co. (Adnoc). However, Iraq's export model differs from that of the UAE and Saudi Arabia, as Iraq does not manage the transportation of oil out of the Persian Gulf itself, but instead uses price discounts on oil to incentivize other companies to take on the risk of transportation.
Furthermore, crude oil from Iraq may help fill supply gaps for some Chinese refineries after other major oil sources faced limitations.
While the amount of oil China is buying from Saudi Arabia under long-term contracts may remain low next month due to logistical challenges in transporting oil from the Red Sea, which still faces high risks.
Meanwhile, some Chinese refineries missed out on opportunities to obtain oil from Adnoc's latest oil auction.
This situation has made Iraqi oil an increasingly important supply source for China, especially at a time when the main oil shipping routes in the Middle East face uncertainty from the war and security risks in the Strait of Hormuz.
Reference: www.bloomberg.com
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