China has ramped up Russian oil imports amid Middle East supply problems, says Reuters

Chinese state-owned corporation Sinopec has purchased 30-40 cargoes of Russian ESPO crude for delivery in July-September to offset reduced supplies from the Middle East caused by the war with Iran.

Source: Reuters

Details: The volumes amount to 241,000-320,000 barrels per day, or 5-6% of Sinopec's refining capacity, which stands at 5.2 million barrels per day.

Russian crude is cheaper than rival grades from Brazil and West Africa. The purchases have helped Sinopec keep refining volumes relatively stable and export surplus fuel at high margins.

In July, the company received about 7.4 million barrels of ESPO, most of which was delivered to the port of Rizhao in Shandong province. For August and September, Sinopec purchased at least 10 cargoes for each month.

China sharply reduced its overall oil imports after the start of the war with Iran. In June, purchases fell by 41% from year-earlier levels. The country eased fuel export restrictions imposed in March for July and August.

"Rather than broad-based import growth, demand is shifting towards barrels with greater delivery certainty and lower freight costs – primarily onshore inventories and short-haul Russian Far East cargoes," said Emma Li, an analyst at Vortexa Analytics.

Background:

• In March, Sinopec and PetroChina resumed purchases of Russian oil, taking advantage of a temporary exemption from US sanctions amid reduced supplies from the Middle East.
• In June, China's crude oil imports fell by 41% year on year to 29.27 million tonnes. This was the lowest level since October 2016.

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