ByTsvetana Paraskova– Mar 19, 2025, 7:00 AM CDT
Privately-managed Chinese ports are accepting sanctioned tankers carrying Russian oil while a non-sanctioned vessel has recently discharged crude that was transferred on it from three smaller ships sanctioned by the U.S. in January, Reuters reports, citing ship-tracking data and sources with knowledge of the operations.
The continued arrival of Russian oil highlights the lengths at which some private refiners and ports in China are going to continue buying the cheaper crude from Russia.
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Chinese refiners, especially the independent firms in Shandong, have worked to reshuffle crude flows for Russian oil after the initial shock from the U.S. sanctions.
A massive reshuffle of tankers allows non-sanctioned vessels to pick up trade with Russian and Iranian oil, which will result in a rebound in China’s imports of cheaper crude from the two producers in March, from a two-year low in February, analysts and traders told Reuters.
The sanctions on Russia, as well as the tightening sanctions on Iran’s shadow fleet, have prompted a run on non-sanctioned vessels, with daily rates doubling and even tripling over the past month.
These rate hikes have attracted operators of non-sanctioned tankers to enter the trade with Russian and Iranian oil amid handsome profits being made.
While state oil firms in China either halt or reduce Russian oil volumes, at least for now, the independent refiners in China are picking up the slack.
Chinese oil majors have adopted a more cautious approach toward Russian grades following the U.S. sanctions, Emma Li, senior market analyst at Vortexa, wrote in an analysis last week.
“Even when transported via non-sanctioned tankers, their ESPO Blend purchases were limited. Market sources indicate that some state-owned companies have completely halted Russian crude purchases in March after scaling back in February,” Li added.
The independent refiners, for their part, boosted purchases of Russia’s Far East flagship ESPO Blend and more February-loading cargoes were delivered to the Shandong and Jiangsu provinces, primarily to teapot refiners, Vortexa has estimated. In January, the independent refiners preferred to reduce runs rather than seek alternative barrels amid uncertainties surrounding ESPO supply, Li noted.
By Tsvetana Paraskova for Oilprice.com
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