Sinopec Diversifies Oil Supplies Amid Middle East Cuts

China's state-owned Sinopec Corp has increased purchases of Russian oil to offset supply cuts from the Middle East, according to multiple trade sources and ship tracking data. The refiner has bought a total of 30 to 40 shipments, or about 241,000 to 320,000 barrels per day (bpd), of Russia's Eastern Siberia-Pacific Ocean (ESPO) blend for July to September deliveries. This equates to 5% to 6% of the refiner's processing capacity of 5.2 million bpd.

Despite China limiting overseas sales of fuel products from March, Sinopec has maintained relatively stable throughput and shipped surplus fuel on strong export margins. The refiner secured about 7.4 million barrels of ESPO in July, mostly delivered into Rizhao port in the refining hub of Shandong province.

Sinopec's recent ESPO purchases have not involved sanctioned entities as counterparties and have been made via intermediaries, according to four people familiar with the matter. Before the Iran war, Sinopec sourced nearly half of its crude from the Middle East and was among Saudi Arabia's biggest customers.