EU’s strong action on Russian oil is impossible to prevent coarse purchases of China: Source
The latest EU’s strong action in the Kremlin energy industry will have a limited direct impact on the purchase of Russian raw cargo, trade, purification sources, and Russian delivery sources to the July 21 platts.
China is the main goal for Russian raw supply, by sea and pipes. In the first half of this year, a combination of seaborne and pipe imports fell 10.9% from year to year to 49.11 million MT (1.99 million B/D), with a market share decreased to 17.6% from 20% seen during January-June 2024, according to Chinese general administration from Customs data released on July 20.
EU on July 18 banned imports of processed products made from Russian crude oil, lowering the price of oil prices to $ 47.6/B from $ 60/B, and blacklisted more than 100 shadow fleet tanks.
Chinese buyers from the independent and state -owned sector digest new sanctions packages as a trading cycle for eSPO which contains September, the most profitable Russian class, does not begin until this weekend.
But almost all sources show that EU sanctions are less effective against China than those worn by the US, mainly because of the dominance of US dollars as a world currency, in contrast to the lower Euro influence.
“We take Russian crude oil cargo based on shipping, so shipping and FOB prices are the main problems that we need to worry about,” said a rough procurement strategy expert with state -owned refiners.
Platts, part of the S&P Global Commodity Insights, assessed that the Espo mixture next month with a $ 3.20/B discount for the platts of Dubai Round Assessments on FOB Kozmino on July 21 Asia Closure, up 5 cents/B days throughout the day and tracking the different Middle East crude oil. This can be translated into a fixed price of $ 64.60/b.
Exposure risk
“Risk control of credit facilities varies; some banks will miss checking ship information when the agreement only involves the cargo that has arrived at [designed] Ports, instead of cargo on the way, “said a commodity banker based in Singapore.
“However, if the agreement was carried out in the US dollar, the Clearing Bank, mostly in the US, sometimes it will conduct random inspections on sensitive delivery, which includes examining operator legitimacy,” the banker added, showing a higher risk of exposure when Russian rough agreement was carried out in the US dollar.
A significant proportion of Russian crude oil agreements is carried out in Yuan China, said trade and purification sources.
Paul Sheldon, a director with S&P Commodity Insights, said Russia was impossible to see supply disorders from more stringent European Union sanctions. “Russia repeatedly showed its ability to get oil to the market by utilizing its dark fleet or holding his nose and selling to a hat,” he said in a report dated July 19. “In addition, the US and other G7+ countries have not agreed.”
Transportation to carry 80,000 MT crude oil from Kozmino to North China was established with a total of $ 1.5 million on July 21, not changing from July 18 and July 17, data platts showed.
China usually takes about 30 shipping of Espo loaded from Kozmino Monthly, each measuring around 100,000 MT.
Add around 800,000 b/d supply through a pipe under a long -term contract between resneft and CNPC, ESPO contributed about 75% of the import of Chinese crude oil from Russia.
Iranian crude oil is preferred
Reduction of Russian crude oil imports is mainly because Chinese independent refineries prefer competitive Iranian crude oil.
Russian crude oil imports this sector dropped to the lowest level of four months from 650,000 B/D (2.66 million MT) in June, while Iran’s crude oil imports recovered by 43% from May to 1.68 million B/D, according to platts data.
In the latest trading cycle, the August shipping eSPO cargo is offered at Ice Brent Plus around $ 2.20-2.40/B in DES Shandong, up from a premium of around $ 2/B for July and $ 1.70-1,80/B for June delivery, said market sources.
In comparison, Iranian crude oil is offered with a discount of around $ 3.00- $ 3.50/b on Ice Brent Futures at the same base.
As a result, the total import of China’s crude oil from Russia up and down 0.3% from May to 8.35 million MT in June, falling 0.9% year to year even though state -owned refineries increase purchases, GAC data shows.
General Iran is usually declared as a mixture of Malaysia-origin mixed barrels to surround sanctions, according to market sources. GAC data shows the import of China crude oil from Malaysia rebound from the lowest level of four months 5.07 million MT in May to 7.09 million MT in June.
Considering Iran’s supply, platts estimates that China’s raw imports from the Middle East will increase 1% from year to year to 6.28 million b/d in the first half of this year, while they are from the Commonwealth of Independent States, especially Russia, down 9% year to year to 2.08 million B/D.
Source: Platts
