Sinopec Turns to Russian Oil Amid Iran War-Related Supply Shocks

China's state-owned Sinopec Corporation has increased its purchases of Russian oil to offset Middle East supply shocks caused by the Iran war. The company, which is the world's largest refiner, has bought between 30 and 40 shipments, or around 241,000 to 320,000 barrels per day, of Russia's Eastern Siberia-Pacific Ocean (ESPO) blend for July to September deliveries.

This represents about five to six percent of Sinopec's processing capacity of 5.2 million barrels per day. The purchases have helped the company maintain relatively stable throughput and export surplus fuel on strong margins, despite China limiting overseas sales of fuel products from March to protect domestic supply amid trade disruptions.

Before the Iran war, Sinopec sourced nearly half of its crude from the Middle East and was among Saudi Arabia's biggest customers. However, since then, it has shifted its focus towards Russian oil, which is cheaper than rival grades from sources such as Brazil and West Africa.