China’s imports of crude oil from Russia hit an all-time high in June, Chinese government data showed on Thursday, with refiners continuing to snap up Russian ESPO even as discounts against international benchmarks narrow.
Arrivals from Russia totalled 10.50 million metric tons in June, or 2.56 million barrels per day (bpd). Cargo volumes were up 44% from the same month last year, according to data from the General Administration of Customs.
Russian arrivals for the first half totalled 52.61 million metric tons, up 22% on the same period last year.
Shipments from Saudi Arabia totalled 7.92 million metric tons last month, equivalent to 1.93 million bpd, up 12% from the previous month. The figure represented a roughly 57% increase on the volume shipped from Saudi Arabia in June last year.
Saudi shipments to China in June had been expected to fall, as narrowing refining margins led Chinese refiners to look for cheaper crude from Russia and other suppliers, even after Riyadh cut the official selling price for June-loading Arab Light crude by 25 cents in May.
While Western sanctions and a price cap continue to ensure that Russian crude trades at a discount to global benchmarks, the discount has narrowed in recent months due to increasing ESPO demand from Chinese buyers and extensive purchases of Russian Urals grade by Indian refiners.
June-delivery ESPO shipments were priced at a $5.50 per barrel discount to the ICE Brent benchmark, versus $8.50 against ICE Brent for shipments delivered back in March.
Chinese refiners use intermediary traders to handle shipping and insurance of Russian crude to avoid violating Western sanctions.
Customs data also showed that imports from Malaysia were 1.51 million bpd in June, up 133% from the same period last year. Malaysia is often used as an intermediary point for sanctioned cargoes from Iran and Venezuela.
U.S. exports to China were up 354% on last year despite geopolitical tensions, as U.S. grades maintained last month’s pricing advantage over Middle Eastern producers following the OPEC+ supply cuts.
U.S. crude shipments to China totalled 3.05 million metric tons in June, the highest since December 2020.
Chinese refiners are expected to lean increasingly on alternative suppliers such as Brazil in the third quarter, as Russia and Saudi Arabia have pledged to cut production.
Source: Reuters (Reporting by Andrew Hayley; Editing by Jacqueline Wong, Sonali Paul and Christian Schmollinger)