Russian oil exports to China hit record high

Russian oil exports to China have been set to rise for the third consecutive month and reach a new record level in February as independent refineries bought cargoes at significant discounts after India sharply reduced purchases.

Source: Reuters

Details: According to early estimates by Vortexa Analytics, Russian oil supplies to China in February will amount to 2.07 million barrels per day, above the January figure of 1.7 million barrels per day.

Early data from Kpler indicates February imports were 2.083 million barrels per day, above 1.718 million barrels per day in January.

China has replaced India as Moscow's main customer for seaborne supplies since November, as Western sanctions over the war in Ukraine and pressure to conclude trade deals with the US have forced New Delhi to cut imports of Russian oil to a two-year low in December.

Kpler data show that Russian oil imports to India in February are estimated to fall to 1.159 million barrels per day.

This has led to Russian oil being priced US$9-11 per barrel below the ICE Brent baseline price for January/February for deliveries to China, which is the lowest level in recent years for Urals crude.

Urals crude, as well as other export grades such as Sokol and Varandey, have been added to regular deliveries of the flagship Russian ESPO blend exported from the far eastern port of Kozmino, located closer to China, creating strong competition from Iranian supplies.

Independent Chinese refineries, known as "teapots", are the world's biggest buyers of oil from Russia, Iran and Venezuela, which is under US sanctions.

Background: Oil traded without significant changes on Monday as investors assessed the market impact of upcoming US-Iran talks aimed at de-escalating tensions amid an expected increase in OPEC+ supplies.

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