China’s big refiners snapping up Russian oil – Reuters
China's largest state-owned and private refineries are buying more Russian crude, driving up its price, and forcing smaller independent producers, known as ‘teapots’, to search for cheaper options, Reuters reported this week.
Top Chinese buyers, which shunned Russian oil when the EU and G7 imposed an embargo and a price cap on the commodity in December, have restored confidence since then and joined the race for discounted oil.
In February, state refiners PetroChina and Sinopec resumed imports, and in March, large private oil refiners Hengli Petrochemical and Jiangsu Eastern Shenghong Co followed suit, according to traders and shiptracking data from Refinitiv, Kpler and Vortexa.
In March, China's overall Russian crude imports, including pipeline deliveries and seaborne supplies, surged to a record 9.61 million tons, which is the equivalent to 2.26 million barrels per day (bpd), customs data showed on Friday.
“China's imports of Russian Urals are on track to break March's record [in April] as more refiners start to tap on the discounted crude from Russia's Baltics,” said Vortexa analyst Emma Li, adding that around 700,000 bpd of Urals may reach China in April, up from 600,000 bpd in the previous month.
Meanwhile, smaller refiners had to opt for alternatives such as Russian Arctic grades, Iranian and Venezuelan oil as the big buyers are back on the market.
In March alone, a record 4.2 million barrels of Varandey blend from the Russian Arctic were delivered to China's Shandong province, home to most of the teapots, Kpler data showed.
Loadings of crude from Russia's western ports in April is expected to reach the highest level since 2019, above 2.4 million barrels per day (bpd), despite Moscow's pledge to cut oil production, trading and shipping sources said.
At the same time, discounts that Russia was offering as it sought to divert supplies away from the West are narrowing. Discounts for the country’s flagship Urals blend contracted in China for July have reduced to about $9-$10 a barrel to ICE Brent futures on a delivered ex-ship (DES) basis, from around $14 a barrel for March deliveries, according to Reuters.
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