Chinese state-controlled refining giant Sinopec has returned to buying Russian crude oil after halting purchases last month due to concerns about the U.S. sanctions on Russia’s oil trade and shadow tanker fleet imposed in January, trade sources told Reuters on Wednesday.
Sinopec, the biggest refiner in Asia by processing capacity, has bought its first ESPO blend from Russia for May loading since the February loading plans, after refraining from buying the grade for loading in March and April until it assesses the risk from the U.S. sanctions.
The reason why Unipec, Sinopec’s trading arm, resumed purchases was not immediately known.
Last month, some state-controlled Chinese refiners reduced or halted purchases of Russian oil loadings for March as they assessed the risks of dealing with sanctioned entities.
Sinopec and Zhenhua Oil, for example, suspended purchases of Russian crude oil loading in March, amid concerns over secondary sanctions, trade sources with knowledge of the plans told Reuters in early March.
Oil giants PetroChina and CNOOC continued to buy Russian oil for March loadings, but at reduced rates.
While state oil firms in China either halted or reduced Russian oil volumes, the independent refiners in China, which prefer to buy cheaper Russian and Iranian oil, picked up the slack.
Chinese oil majors 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 month.
“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.
Chinese buyers sought workarounds the sanctions while Russia deployed more of its non-sanctioned fleet to service the Far East Russia-China route.
As a result, Chinese crude oil imports topped 12 million barrels per day (bpd) in March, the highest volume since August 2023, as flows of Iranian and Russian crude rebounded from the lows seen early this year with the U.S. sanctions.
Russian crude flows are on the rebound in China, with many cargoes on sanctioned tankers finding buyers in Shandong. Moreover, stranded Russian Arctic cargoes are now targeting Chinese teapot buyers via ship-to-ship (STS) transfers using the dark fleet, Vortexa said earlier in April.
By Michael Kern for Oilprice.com
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