The Chinese state refiner shifted toward cheaper Russian Far East crude for July-September delivery after Iran war disruptions cut Middle East flows and altered China’s fuel export policy.
Sinopec Corp has increased purchases of Russia’s ESPO (Eastern Siberia-Pacific Ocean) crude to offset reduced Middle East supply after the Iran war disrupted trade flows. Trade sources and ship-tracking data show the state-owned refiner bought 30 to 40 cargoes for July to September delivery, equivalent to about 241,000 to 320,000 barrels per day, or roughly 5% to 6% of its 5.2 million bpd processing capacity. The cheaper Russian barrels have helped Sinopec keep refinery throughput relatively stable and export surplus fuel at strong margins even after China curbed overseas fuel sales from March to protect domestic supply. China’s overall crude imports have fallen sharply since the war began, with June volumes down 41% from a year earlier, but easing fuel export restrictions for July and August has supported selective demand recovery. Analysts say refiners are favoring barrels with more reliable delivery and lower freight costs, particularly onshore inventories and short-haul cargoes from Russia’s Far East. Sinopec sharply reduced Saudi purchases, taking no Saudi crude in June and July and only 2 million barrels in August, versus 20 million barrels in both March and April. Reuters previously reported that Sinopec had suspended Russian buying in October after Washington sanctioned Rosneft and Lukoil, then resumed in March and April after a temporary U.S. waiver. Recent ESPO purchases were made through intermediaries and did not involve sanctioned entities as counterparties, according to people familiar with the matter.