Sinopec steps up Russian oil imports to offset Mideast supply cuts, traders and tracker say

• Sinopec slashed Saudi oil imports from 20 million barrels in March/April to zero in June/July and just 2 million barrels in August, compared to an 11 million barrel monthly average before the Iran war
• Russian ESPO crude trades at $1-$2 per barrel discount to Brent, making it about $10 cheaper than rival grades from Brazil and the Middle East, helping Sinopec maintain stable refining throughput
• The purchases avoid sanctioned entities by using intermediaries and Chinese yuan payments, representing 5-6% of Sinopec's 5.2 million bpd processing capacity

Summary: Sinopec Increases Russian Oil Imports Amid Middle East Supply Disruption

Key Developments:

China's Sinopec Corp, the world's largest refiner, has significantly increased purchases of Russian Far East crude oil to compensate for reduced Middle Eastern supplies due to the Iran war. The state-owned refiner purchased 30-40 shipments of Russia's ESPO blend for July-September delivery, equivalent to 241,000-320,000 barrels per day (bpd), representing 5-6% of its 5.2 million bpd processing capacity.

Supply Shift:

Before the Iran conflict, Sinopec sourced nearly half its crude from the Middle East and was a major Saudi Arabia customer. Saudi purchases have collapsed dramatically:

• June-July: Zero barrels
• August: 2 million barrels (down from 20 million in March-April)
• Pre-war average: 11 million barrels monthly

Pricing Advantage:

September-loading ESPO crude traded at $1-2 per barrel discount to Brent, approximately $10 cheaper than rival grades like Middle Eastern Oman and Brazilian Tupi. Pre-Iran war, ESPO traded at a $10 discount.

Strategic Context:

Sinopec had suspended Russian purchases in October following U.S. sanctions on Rosneft and Lukoil but resumed in March-April with a temporary waiver. Recent purchases avoid sanctioned entities through intermediaries and are conducted in Chinese yuan. The refiner secured 7.4 million barrels in July, primarily delivered to Rizhao port in Shandong province.

China's overall crude imports fell 41% year-over-year but have moderated restrictions for July-August. Analysts note demand is shifting toward barrels with greater delivery certainty and lower freight costs, particularly short-haul Russian cargoes.