Sinopec Turns to Russian Oil as Middle East Supplies Squeeze

Sinopec, China's largest refiner, has increased its purchases of Russian oil to compensate for reduced supplies from the Middle East due to the Iran war. According to trade sources and ship tracking data, Sinopec bought between 30 to 40 shipments, or about 241,000 to 320,000 barrels per day, of Russia's Eastern Siberia-Pacific Ocean (ESPO) blend for July to September deliveries.

This is a shift from its previous reliance on Middle Eastern oil. Before the Iran war, Sinopec sourced nearly half of its crude from the Middle East and was among Saudi Arabia's biggest customers.

The refiner has been able to maintain relatively stable throughput and sell surplus fuel at strong export margins due to its increased Russian oil purchases. However, China's overall crude imports have decreased since the start of the Iran war, with June purchases plummeting 41% from year-earlier levels.

Emma Li, lead China analyst with ship tracker Vortexa Analytics, noted that Sinopec's crude demand appears to have bottomed out following the easing of fuel export restrictions, but the recovery remains selective. She also pointed out that demand is shifting towards barrels with greater delivery certainty and lower freight costs.