Sinopec Increases Purchases of Russian Oil Amid Reduced Supplies from the Middle East

Chinese oil refinery Sinopec has increased its purchases of Russian oil from the Far East, which is linked to reduced supplies from the Middle East due to the war with Iran. From July to September, the company acquired between 30 to 40 batches of Russian East Siberian and Pacific Ocean (ESPO) blend, with a total volume ranging from 241,000 to 320,000 barrels per day, accounting for 5%-6% of the refinery's capacity of 5.2 million barrels per day. In July, Sinopec received about 7.4 million barrels of ESPO through the Rizhao port, and at least 10 shipments have been purchased for August and September. Analysts note that demand is shifting towards barrels with guaranteed delivery and low transportation costs. Before the war with Iran, Sinopec purchased nearly half of its oil from the Middle East, but in June and July, it turned away from Saudi crude. Payments for supplies from Russia are made in yuan through intermediaries, without involving sanctioned organizations. The price of ESPO oil for September loading has a discount of $1 to $2 per barrel compared to Brent.