Privately-managed Chinese ports are accepting sanctioned tankers carrying Russian oil, and a non-sanctioned vessel recently unloaded crude transferred from three smaller ships that were sanctioned by the U.S. in January, according to ship-tracking data and sources familiar with the operations, as reported by Reuters.
The continued arrival of Russian oil underscores the efforts made by some private refiners and ports in China to maintain imports of the cheaper crude from Russia.
Chinese refiners, particularly independent ones in Shandong, have worked to adjust crude flows to accommodate Russian oil after the U.S. sanctions were initially imposed.
A significant shift in tanker movements has allowed non-sanctioned vessels to pick up Russian and Iranian oil, leading to a rebound in China’s imports of cheaper crude from these two countries in March. This comes after imports hit a two-year low in February, according to analysts and traders who spoke with Reuters.
The sanctions on Russia and tighter restrictions on Iran’s shadow fleet have led to a surge in demand for non-sanctioned vessels. Daily rates for these vessels have doubled and even tripled in the past month.
These rate increases have drawn operators of non-sanctioned tankers into the trade of Russian and Iranian oil, as they take advantage of the profits to be made.
While state-owned oil firms in China have either reduced or halted imports of Russian oil for now, independent refiners are stepping in to fill the gap.
Chinese oil majors have been more cautious about purchasing Russian oil following the U.S. sanctions, said Emma Li, a senior market analyst at Vortexa, in an analysis last week.
“Even when transported by non-sanctioned tankers, their ESPO Blend purchases have been limited. Some state-owned companies have completely stopped buying Russian crude in March after cutting back in February,” Li explained.
In contrast, independent refiners have increased their purchases of Russia’s Far East flagship ESPO Blend. More February-loading cargoes were delivered to the Shandong and Jiangsu provinces, mostly to smaller, independent refiners, according to Vortexa’s estimates. In January, these refiners were hesitant to seek alternative crude supplies due to uncertainties over the availability of ESPO.
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