Sinopec purchased between 30 and 40 cargoes of ESPO crude oil from Russia during the July–September period, according to traders and vessel trackers. Most of these cargoes arrived at Rizhao Port in Shandong, China.
The company purchased at least 10 cargoes of ESPO crude oil in both August and September. In July alone, Sinopec purchased approximately 7.4 million barrels of the Russian crude.
Estimated daily volume of ESPO crude oil imported by Sinopec from Russia
The volume of ESPO crude imported from Russia accounts for 5% to 6% of Sinopec’s total daily processing capacity of 5.2 million barrels.
Decline in Saudi Arabian imports
Sinopec's crude oil purchases from Saudi Arabia have seen a significant reduction. The company purchased no crude oil from Saudi Arabia in June and July, and only 2 million barrels in August.
This follows much higher volumes in March and April, when Sinopec purchased 20 million barrels in each of those months.
The decline in Saudi Arabian exports to China has been driven by high prices, transportation risks around the Strait of Hormuz, and Chinese refiners shifting to alternative sources.
Cost and logistics advantages
Russian ESPO crude offered pricing advantages, trading at a discount of $1 to $2 per barrel compared to the Brent crude oil benchmark in September. Furthermore, the price was approximately $10 per barrel lower than competing oils such as Brazil’s Tupi type and Oman crude.
Shipping crude from Russia’s Far East ports to China reduces freight costs due to the shorter distance.
A partial relaxation of petroleum product export restrictions in July and August allowed Sinopec to increase refinery production and accelerate its search for cheaper crude oil.
Sanctions and payment methods
Sinopec and other major Chinese state refiners halted Russian crude imports in October last year following U.S. sanctions on leading Russian oil producers. Sinopec later resumed these imports in March and April by utilizing a temporary exemption period.
Recent purchases from Russia have been conducted through intermediary entities rather than directly with companies on the sanctions list. Payments for these imports are made in Chinese yuan, a practice used since the early stages of the Ukraine war.
Sinopec stated that it does not publicly disclose its operational trading decisions.
Market implications
The shift in China’s oil supply routes is reshaping competition between Russia and Middle Eastern producers for the Chinese market.
If this shift becomes permanent, Saudi Arabia may need to redirect surplus oil to other markets or reconsider its pricing for Asian customers.
Future supply routes will be determined by sanctions decisions, tanker availability, security in the Strait of Hormuz, the volume of shipments possible from Russia’s Kozmino Port, and price.
China’s total crude oil imports declined by 41% in June compared to the same month last year.
