An Iranian crude cargo loaded by trading house Trafigura is set to arrive in east China this week, heating up the race among oil suppliers to meet the rise in demand for imports from China’s independent refineries, trade sources said.

Only last year, China’s independent oil refiners, known as teapots, were granted licenses to import crude in line with Beijing’s efforts to boost competition in a sector dominated by state-run groups. Frenzied buying by the teapots followed, drawing in rare supplies from both Saudi Arabia and Kuwait.

Now, Iran is eyeing the new group of Chinese buyers, located mainly in eastern Shandong province, as it rebuilds its global market share after western sanctions were lifted in January.

The National Iranian Oil Co (NIOC) sold a 2-million barrel Iranian Heavy crude cargo to Trafigura, which was loaded in late June onboard supertanker Olympic Target.

Trade sources with knowledge of the deal say this cargo is heading to Shandong, putting Trafigura ahead of other major trading firms in being the first to sell Iranian oil to teapots.

Trafigura, the world’s second-biggest independent oil trader, declined to comment on this, while NIOC could not be immediately reached for comment.

But sources told Reuters the sale was agreed on condition Trafigura would market the crude to Chinese teapots, which are outside NIOC’s usual Chinese clients – state refiners Sinopec and PetroChina, and that the oil would be offloaded at Shandong.

Iran, OPEC’s No.3 producer, needed to sell through a trader given logistical constraints and credit risks involved when dealing with small non-state buyers, the sources said.

“No single teapot could absorb a VLCC (Very Large Crude Carrier) cargo. Without crude storage operation in China, it is hard for NIOC to sell into teapots,” said a Beijing-based trading official with knowledge of Iran’s Chinese oil sales.

Saudi Aramco for instance sold its first spot cargo to a teapot from its storage in Okinawa, while Kuwait supplied oil to privately-controlled Shandong Hongrun Petrochemicals, via state-run oil trader Sinochem Corp.

NIOC’s sale via Trafigura will help Iran to also avoid demurrage costs at congested Shandong ports, the sources said.

Demand from the teapots have accounted for more than half of China’s incremental crude purchases this year and have led to long lines of tankers waiting to unload at ports.

The Olympic Target, carrying Iranian crude, is expected to arrive later this week, shipping data on Thomson Reuters Eikon showed. Trafigura is expected to move the cargo into storage tanks and then sell it in smaller parcels to teapots, the sources said.