Sinopec Increases Russian Oil Imports Amid Middle East Shortages

Sinopec Corp, the world's largest refiner, increased its imports of Russian Eastern Siberia-Pacific Ocean (ESPO) blend crude oil between July and September to offset supply shortages from the Middle East resulting from the war in Iran. The company purchased 30 to 40 shipments during this period, averaging 241,000 to 320,000 barrels per day, which accounts for 5% to 6% of its total processing capacity.

This strategic shift follows a sharp decline in crude imports from Saudi Arabia. Sinopec imported only 2 million barrels in August, a significant drop from the 20 million barrels it imported during March and April. The company opted for Russian oil because it is more cost-effective than alternative supplies from Brazil or West Africa.

To bypass U.S. sanctions targeting producers such as Rosneft and Lukoil, Sinopec conducted these trades through intermediaries and utilized Chinese yuan for payments. This activity aligns with the position of the Government of China, which does not recognize unilateral U.S. sanctions and had previously limited fuel exports starting in March to protect domestic energy supplies.