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Russia is China's top crude oil supplier for second month in a row

Low-priced Russian oil has also reduced the Asian economic giant's imports from Saudi Arabia and Iraq.

AP

China is the world's top importer of crude and Russian oil helps Chinese refiners keep costs down.

China has extended record imports of low-priced Russian crude oil into June despite a lockdown-induced slackening in its total crude oil imports, squeezing out supplies from the Middle East and West Africa, according to tanker trackers and traders.

Russia remained China's top supplier for the second month in a row, surpassing Saudi Arabia, according to tanker tracking specialists Vortexa, Kpler and Refinitiv, on Wednesday.

China is the world's top importer of crude and Russian oil helps Chinese refiners keep costs down at a time when their margins are crimped by slowing demand from strict Covid-19 controls and Beijing's restrictions on fuel exports amid supply concerns.

June imports of Russian oil – including seaborne shipments and pipeline supplies – are set to total about 2 million barrels per day (bpd), or 15 percent of China's crude demand, on par with May's record volume, these analysts said.

Saudi oil imports likely to drop

Separately, China is set to receive approximately 880,000 bpd of Russian oil via the two East Siberia-Pacific Ocean Pipelines (ESPO) and the Kazakhstan-China pipeline under government deals, with all three projects pumping at maximum rates, said two traders with knowledge of the matter.

Meanwhile, overall Saudi oil imports in June are forecast to slump to a near two-year low of 1.3 million bpd, Refinitiv estimated.

Alongside India, the world's third-largest crude importer, the Asian economic powerhouses have since May ramped up Russian oil imports after Western companies backed off dealing with Moscow for fear of falling foul of sanctions over Russia's offensive in Ukraine or drawing negative publicity.

Combined, the two countries bought an additional 1 million bpd of Russian oil in May versus April, according to Chinese customs and Indian trade sources. That is equivalent to a fifth of Russia's total exports, providing Moscow a buffer from western sanctions while bolstering refining profits at home.

Sinopec top lifter

In China, state refiner Sinopec Corp remains the top buyer of ESPO blend crude, Russia's flagship export grade from Far Eastern port Kozmino, lifting 12 shipments, or a third of Russia's seaborne ESPO sales in June, Vortexa's analyst Emma Li said.

Sinopec's purchases, totalling some 20 million barrels over May and June – some of which were bought at a record discount of $20 a barrel below benchmark Dubai crude on FOB Kozmino basis, according to traders – were sent to its refineries.

That's a boon for Sinopec refineries. Sinopec declined to comment.

Chinese customs is expected to release June crude oil import data next week, which analysts said could post an 8 percent slide from a year earlier, reflecting the impact of coronavirus curbs on business activity and consumption in dozens of China's cities.

Customs will release import origin data on July 20.

SOURCE: TRTWorld and agencies