Sinopec Turns to Russian Oil as Middle East Supplies Dwindle

China's state-owned Sinopec Corp has significantly increased its purchases of Far East 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. The purchases have helped Sinopec maintain relatively stable throughput and ship surplus fuel on strong export margins, despite China limiting overseas sales of fuel products from March to protect domestic supply amid war-related trade disruptions.

Sinopec has been buying Russian oil using Chinese yuan since the early days of the Ukraine war. Before the Iran war, the refiner sourced nearly half of its crude from the Middle East and was among Saudi Arabia's biggest customers.