Sinopec buys Russian oil to replace Mideast supply after US waiver, sources say

SINGAPORE — Chinese state oil giant Sinopec has bought Russian oil loading in March and April to replace Middle Eastern crude after the US temporarily waived sanctions to ease tight supplies globally, several trade sources said.

One source pegged Sinopec's purchase volume at eight to 10 cargoes of ESPO blend crude exported from the eastern port of Kozmino, while another estimated it at about 10 cargoes of ESPO.

Each ESPO cargo is 740,000 barrels.

Sinopec bought the cargoes at premiums of US$8 (S$10) to US$10 per barrel to ICE Brent, a third person said. 

Russian crude traded at a discount of about US$10 per barrel before the Iran conflict.

The sources spoke on condition of anonymity.

The US Treasury Department allowed purchases of Russian oil and products at sea from mid-March with a 30-day waiver that expired on April 11, as part of efforts to control global energy prices during ​the US-Israeli war with Iran.

The waiver led the trading arms of ‌Sinopec and PetroChina to make inquiries with suppliers for possible purchases. 

They had suspended seaborne purchases of Russian crude since October due to Western sanctions, Reuters reported previously.

It was unclear if PetroChina has bought seaborne cargoes since.

Sinopec did not immediately respond to a request for comment.

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Big Middle East exposure

Sinopec, the world's largest refiner, usually sources roughly half of its crude from the Middle East, leaving it particularly exposed to the near-closure of the Strait of Hormuz amid the US-Israeli war on Iran.

Last month Sinopec told a results briefing it was cutting runs by five per cent in March because of the disruption, while assessing the possibility of purchasing Russian oil under waiver.

China's seaborne Russian crude imports in March stood at 1.82 million barrels per day (bpd), off February's record of 1.92 million bpd, Kpler data showed. 

April's imports stand at 1.92 million bpd so far.

The US waiver boosted demand from Indian refiners who snapped up millions of barrels of Russian oil at sea. 

Market participants expect Washington to extend the waiver, although it has made no announcement.

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