China Has Sharply Increased Its Purchases of Russian Oil — Reuters
The Chinese state-owned oil company Sinopec has sharply increased its purchases of Russian ESPO Blend crude oil. The company purchased a record volume of crude for delivery in July–September in an effort to offset the reduction in supplies from the Middle East.
Sinopec, a Chinese state-owned company considered the world’s largest oil refiner, has sharply increased its purchases of Russian Far Eastern crude. The crude in question is the ESPO Blend, which is produced in Eastern Siberia and shipped to China by sea. Reuters reported this, citing traders and vessel tracking data. According to the agency’s sources, Sinopec purchased a total of 30 to 40 shipments of Russian oil for delivery in July, August, and September. Converted to daily volumes, this amounts to approximately 241,000–320,000 barrels. For the company, this is one of the largest purchases of this grade of Russian oil in recent times.
The scale of the purchases is quite large. The volume purchased may account for approximately 5–6%
of Sinopec’s total oil refining capacity, which stands at about 5.2 million barrels per day. In other words, Russian crude plays a significant role in the operations of one of China’s largest oil refining giants.
Why China Increased Its Purchases
One reason was problems with oil supplies from the Middle East. Against the backdrop of the war with Iran and the resulting market disruptions, China began seeking alternative sources of crude. In this situation, Russian oil emerged as one option that allows Chinese companies to maintain the necessary supply volumes. China remains the world’s largest oil buyer. At the same time, following the outbreak of the war with Iran, the country significantly reduced its crude oil imports. In June, import volumes fell by 41% year-over-year.
Against this backdrop, Beijing began to partially ease restrictions on the export of petroleum products. Specifically, restrictions on exporters were eased for July and August. This provided Chinese refiners with an additional incentive to ensure their facilities had sufficient supplies of crude. At the same time, Russia can offer China another important advantage—a lower price. It is precisely the discount on Russian oil that makes it attractive to buyers, especially when prices and logistics from other sources become less favorable.
Russian Oil Is Sold at a Discount
According to traders, shipments of ESPO Blend scheduled for September were offered at a discount of approximately $1–2 per barrel relative to the Brent price. For buyers, this means the opportunity to obtain crude at a price lower than the international benchmark. When comparing Russian oil to alternative grades, the difference can be even more pronounced. According to Reuters, ESPO was offered at a price approximately $10 per barrel lower than grades such as Oman from the Middle East or Tupi from Brazil.
For Chinese refiners, this difference matters. Large companies purchase oil by the millions of barrels, so even a few dollars in savings per barrel can add up to significant amounts. That is why Russian crude remains competitive in the Chinese market despite sanctions and political pressure from the West.
What This Means for Russia
The increase in purchases by Sinopec is good news for Russian oil companies. China remains one of the key buyers of Russian oil after Moscow lost a significant portion of its traditional European market due to sanctions. After launching a full-scale war against Ukraine, Russia redirected a significant portion of its energy exports to China and India. This has allowed the Kremlin to maintain high volumes of oil sales, although it often has to offer discounts to buyers.
In the case of ESPO, geography also plays an important role. This oil is produced in Russia’s Far East, so transporting it to China is much easier than shipping Russian crude to distant Asian markets. Chinese refiners can receive oil by sea relatively quickly, making this route particularly convenient.
At the same time, Sinopec’s record purchases do not mean that China has completely abandoned other suppliers. Beijing continues to buy oil from the Middle East, Brazil, and other countries. The increase in Russian supplies in this case is largely due to the need to compensate for disruptions and fluctuations in the global oil market.
Thus, China has taken advantage of the situation on the global energy market to increase its purchases of cheaper Russian oil. For Sinopec, this is an opportunity to obtain raw materials at a favorable price, and for Moscow, it is a way to retain an important buyer amid sanctions and reduced access to Western markets.
