Prices for crude grades from Canada, South America, and Africa have jumped sharply in recent weeks, driven by a rebound in Chinese oil import demand from a decade low, rallying benchmark prices, and continued disruption to Middle East supply. The shift underscores how a single large buyer's procurement choices can ripple across regional crude markets, reshaping differentials for grades that typically trade at a discount to Brent.

Djeno crude from Congo — one of OPEC's smaller producers — is being offered at a premium of $20 per barrel over ICE Brent, anonymous traders told Bloomberg on Monday. That is up from a $15-per-barrel premium two weeks earlier, according to the traders.

Crudes from Canada, Brazil, and Argentina are also rising in price amid increased buying appetite in Asia. Asian crude importers, including China, Japan, and South Korea, have turned to sourcing oil from as far away as Argentina to offset supply losses from the Middle East — a notable change for a region whose refiners have historically leaned heavily on Persian Gulf suppliers. In recent weeks, Asian refiners have purchased Argentina's Medanito crude, with at least one cargo of the grade — comparable to U.S. West Texas Intermediate — loading in August, anonymous traders with knowledge of the purchases told Bloomberg last week.

China in particular is boosting imports of African and American grades, along with its favored Russian ESPO blend, as Iranian crude supply has rapidly dried up following the re-imposed U.S. blockade on Iran's oil exports.

The world's top crude importer has seen its crude imports rebound from the decade-low level recorded in June, as Beijing eased fuel export restrictions and refiners moved to restock and capture fairly decent refining margins.

Still, Chinese crude imports, estimated at about 7.3 million barrels per day (bpd) in August, remain well below pre-war levels of 11-12 million bpd, suggesting China will remain selective in its crude purchases amid volatile and often spiking oil prices. Beijing can afford to be selective because it amassed an estimated 1.4 billion barrels of crude in commercial and strategic storage before the Iran war began. That buffer gives Beijing unusual leverage to wait for favorable pricing rather than chase cargoes at peak premiums — a dynamic traders will be watching as a signal of how durable the current premium on Atlantic Basin and African grades may prove.

For now, the biggest losers in China's refining industry are the small independent refiners — known locally as "teapots" and concentrated in Shandong province — that relied for years on dirt-cheap Iranian and Venezuelan crude. One of those streams is no longer flowing out of the Persian Gulf, and the other is no longer so cheap. How these smaller refiners adapt, and whether Beijing adjusts their import quotas in response, will shape how much of China's rebounding demand actually reaches international spot markets.

By Michael Kern for Oilprice.com