A little over a month ago, we explained that energy traders are "Traders Puzzled As Physical Oil Prices Tumble Amid Surging Chinese Crude Sales, Plunging Imports", and highlighted how already razor-thin independent refiner (teapot) margins had plunged to record negative as a result of the war in Iran and government policies meant to keep prices from rising.
Fast forward to today when the previously discussed dynamics have gotten progressively worse, and this morning Bloomnberg writes that China’s independent oil refiners have slashed operating rates to a nine-year lo.
Run rates at so-called teapots fell to 50.5% in the week to June 21, dropping below pandemic-era lows to the weakest since 2017, according to consultant JLC. High feedstock costs, weak domestic fuel demand, and curbs on product exports have squeezed processors’ margins, prompting them to scale back.
As we noted previously, China - the world’s largest oil importer - sharply reduced crude imports after the conflict erupted in late February as prices initially spiked, sending oil imports to a 9 year low, a key reason why oil prices did not spike even higher in the past few months.
As Bloomberg notes, the nation’s sustained slowdown in flows has brought into focus a nationwide shift away from fossil fuels that’s been driven by greater electrification.
The teapots’ downturn in run rates comes as Iran is now seeking to revive crude exports under a temporary US sanctions waiver. Still, the weak refining economics could limit any near-term rebound in their purchases.
“Teapots are not short of feedstocks, with private-sector commercial inventories in Shandong still above 2025 highs,” said Emma Li, lead China market analyst at Vortexa Ltd., referring to the coastal province where many teapots are located.
Teapot run rates slid further in the second half of June, which means July “could represent a trough before utilization begins to recover,” she said.
In a separate report, Bloomberg also notes that Asian refiners have slowed purchases of Middle Eastern crude after a buying spree over the past three weeks, with oil majors and traders stepping in to take some of the surplus barrels.
Purchases from Abu Dhabi National Oil Co (ADNOC) eased after three rounds of tenders, with a fourth that closes this week set to show a similar pattern, Bloomberg reported citing traders familiar with the matter. More barrels were snapped up by majors and trading houses including Shell and Mercuria.
Adnoc sold around 60 million barrels that will load over June to August across its first three tenders, most of which will flow to Asia. The offers are for grades that are loaded within the Persian Gulf, although buyers will be able to take cargoes via a ship-to-ship transfer outside of the Strait of Hormuz.
Some of the barrels being sold in the latest Adnoc tender are expected to flow toward Europe, said energy traders. That would follow a recent trend, which saw a wave of Middle Eastern oil heading in that direction as China stepped back.
Most refiners have already completed their orders for this month and next, and available crude would need to be significantly discounted to prompt any more buying, traders said. Adnoc has also asked customers with long-term contracts to immediately resume loading supplies, crimping spot demand.
Iraq and Kuwait have also been ramping up output as producers position for a reopening of Hormuz, with talks over a lasting agreement to end the Iran war showing some progress. That’s led to prices for Middle Eastern oil tumbling, with the forward curve of two of the region’s main benchmark grades — Dubai and Murban — now in a bearish contango structure.
A temporary US waiver allowing purchases of Iranian oil has added to swelling supply options, although complications surrounding the financing and insurance of cargoes remain and could be too risky for some refiners. Still, as we reported earlier this week, "Iran Oil Exports Through Hormuz Hit Wartime High,"
Some in the market are assessing whether storing crude could be an option for the impending wave of supply. Traders said freight costs remain too expensive for floating storage to be effective...
... but countries with sites on land should be able to easily accommodate surplus barrels.
Tyler Durden Wed, 06/24/2026 - 20:40By Ethan Howland of UtilityDive
A group of 80 Maryland state lawmakers are backing a complaint at the Federal Energy Regulatory Commission over the PJM Interconnection’s cost allocation for transmission lines that support data centers.
Driven by the way PJM spreads transmission costs, Maryland ratepayers will pay $1.6 billion over the next decade for transmission projects that were approved in the grid operator’s last three regional transmission expansion plans that are designed to mainly serve out-of-state data centers, Maryland’s ratepayer advocate — the Office of People’s Counsel — said in its May 7 complaint.
“While PJM’s rules are unfair for many PJM states, they impact Maryland disproportionately simply because Maryland sits next to Data Center Alley in Virginia,” the Maryland lawmakers said in a Wednesday filing at FERC. “Given the projections of massive data center growth — more than 80,000 megawatts over the next 20 years — PJM is likely to bill Maryland customers billions more for future data center-driven transmission costs.”
The complaint at FERC comes amid an intense focus across the United States on how data centers can affect the electric bills of existing ratepayers through increased generation and transmission costs. The complaint centers on the transmission side of the equation. It contends that FERC is barred from approving transmission cost allocation methodologies that assign costs to ratepayers that won’t gain “roughly commensurate” benefits.
PJM’s cost allocation methodology assigns half of certain regional transmission projects based on a load-ratio share across its footprint, which assumes that all transmission built will benefit the entire grid, according to the ratepayer advocate’s complaint. The other half of transmission costs are assigned via a “solution-based distribution factor analysis,” which fails to capture certain reliability issues caused by data centers, the ratepayer advocate said.
Spreading data center-driven transmission costs across PJM’s footprint could lead to overbuilding, according to the complaint.
“By socializing data center-driven transmission costs to all ratepayers, it insulates states and utilities that attract speculative load growth from overbuilding and stranded asset risk while shifting those risks to neighboring states’ ratepayers,” the ratepayer advocate said.
Further, state-level large-load tariffs fail to address, and may make worse, the misallocation of transmission costs caused by PJM’s transmission cost allocation methodology, according to the complaint.
Also, recent FERC-approved utility “transmission security agreements” between utilities and data centers are “often confidential, highly variable, and fail to protect existing customers,” the ratepayer advocate said.
The agreements leave ratepayers exposed to transmission costs caused by data centers, according to the ratepayer advocate. “Moreover, they carry potential legal consequences that may prove difficult to unravel,” the ratepayer advocate said. The ratepayer advocate said FERC should order PJM to revise its cost allocation methodology so that data centers pay for the transmission projects that they cause.
As a start, PJM should be required to assign the costs of transmission projects that are designed to serve data centers and other large loads to the grid operator’s zones where the data centers are located, according to the complaint. That would allow state-level large load tariffs to address those transmission costs, the ratepayer advocate said.
“The upstream leakage of a substantial portion of data center driven costs at the regional level to other zones through the current operation of the PJM tariff creates an unjust subsidy for that data center load,” the ratepayer advocate said.
The complaint calls on FERC to order PJM to re-study the baseline reliability projects approved in its last three regional transmission expansion plans to determine the costs caused by forecast load growth from data centers.
FERC has extended the comment deadline on the complaint to July 27.
Tyler Durden Wed, 06/24/2026 - 20:20There remains a major divergence in how Iran and the United States are interpreting the results of the MoU signing in the wake of the historic Switzerland peace talks, as lower-level teams remain in place to hammer out the technical details of the agreement.
The divergence/contradiction continues to be seen in not only the latest statements from President Trump himself, but also from the US Treasury:
US Treasury Secretary Scott Bessent has insisted that a large portion of unfrozen Iranian assets would go towards purchasing US food and medicine, despite claims from Iranian officials that they have made no such commitment.
“Any money that the Iranians get is going to be used, first, for the benefit of the Iranian people,” Bessent told CNBC.
It must be remembered that the "Iranian people" that Washington claims to look out for were subject to many weeks of heavy US-Israeli bombing raids, in which men, women, schoolgirls, and children were killed in mass casualty events.
Image via Forbes & Caspian postLikely the funds will be distributed through Qatar - and Bessent also emphasized in the CNBC remarks that "A very large percentage of it will go to buy US foodstuffs and medicine."
He said further, "So we will be recycling the money back into US products."
On Monday, President Trump said that "If the sanctions go out, money is going to be put into this country,” Trump said. “All that money is coming back in the form of purchases of food, which they desperately need… The money that we lift is going to go to our farmers, largely to our farmers."
But once again this is a situation where Iran's public-facing rhetoric obviously doesn't match up. Nothing regarding the Iranian position has changed:
But the Iranians deny that's part of the deal. A spokesperson for the Iranian Foreign Ministry, Esmail Baghaei, said any agricultural purchases would be based on “prices and quality,’’ not terms dictated by Washington.
“It is interesting that the philosophy and goal of the war, which was the destruction of the Iranian civilization and the collapse of Iran, has become enriching American farmers,” Baghaei said.
Iran’s ambassador in Geneva, Ali Bahreini, rejected Vance’s contention that the U.S. and Qatar would dictate how Iran uses unfrozen funds. “Iran is the only country who decides what to do with those assets,” he told reporters.
As a reminder, in total a whopping $50 billion could eventually be released under the MoU framework - something which will drive Republican hawks mad. Al Jazeera reported Tuesday, citing the Iranian side:
A spokesperson said the agreement would allow Iran access to previously frozen assets, although the US says restrictions would remain in place under the arrangement.
According to sources familiar with the negotiations, two separate tranches of $6bn were originally agreed in Doha, with the final signing ceremony intended to take place in Switzerland. The Iranian spokesperson now says that process has been completed.
Under the reported framework, an initial $12bn in Iranian funds would be released. During the 60-day negotiation period, a further $12bn could be unlocked. If the parties ultimately reach a final agreement, the value of sanctions relief and released funds could reportedly rise to as much as $50bn.
Another point of disagreement remains the entry of IAEA nuclear inspectors into the Islamic Republic. Vance had hailed Tehran already agreed to this, while Iran's leaders are in effect saying not so fast.
It's but one of several major contradictions in public rhetoric coming from either side in the wake of the top-level round one meeting in Switzerland.
Tyler Durden Wed, 06/24/2026 - 20:00