Chinese refiners are expanding their crude oil sourcing to West Africa and Brazil as freight rates for long-haul shipments drop, reducing costs. This shift comes as competition for Russian oil barrels heats up, prompting refiners to explore alternative supply options.
Traders involved in the market report that Chinese processors have purchased crude from these distant regions at a premium of $15 to $20 per barrel to ICE Brent for December delivery to China. The lower freight rates have made these purchases more economically viable.
At least one independent Chinese refiner, commonly referred to as a teapot refiner, has secured a cargo from Brazil. This move highlights the growing flexibility in China's oil procurement strategies as refiners seek to diversify their supply chains.