Sinopec Boosts Russian Oil Imports Amid Middle East Supply Crunch

Sinopec, China's largest refiner, is significantly increasing its imports of Russian oil to compensate for supply cuts from the Middle East. The company has bought between 30 and 40 shipments of Russia's Eastern Siberia-Pacific Ocean (ESPO) blend, totaling around 241,000 to 320,000 barrels per day.

This represents about 5% to 6% of Sinopec's total processing capacity of 5.2 million barrels per day. The ESPO oil is cheaper than rival grades from sources like Brazil and West Africa, making it an attractive option for the company.

Sinopec has been buying Russian oil using Chinese yuan since the early days of the Ukraine war. Its recent purchases have not involved sanctioned entities as counterparties and have been made via intermediaries.

The company's demand for crude appears to have bottomed out following the easing of fuel export restrictions, but the recovery remains selective. Sinopec has secured about 7.4 million barrels of ESPO in July, mostly delivered into Rizhao port in Shandong province.