Asia's biggest oil refiner has cut its purchases of Russian crude as it's unwilling to pay the higher prices that customers in India and elsewhere are offering
- China's biggest oil refiner has cut its purchases of Russian crude, according to Reuters.
- India among other buyers outbid China as countries compete for cheap Russian energy.
Asia's biggest oil refiner has slashed its purchases of Russian crude this month as it was unwilling to pay higher prices other buyers elsewhere, were offering, Reuters reported.
China-based Sinopec has been the largest buyer of ESPO, a type of Russian crude, in the past two months, acquiring about 20 million barrels. But in July, the company is expected to snap up fewer cargoes after offering lower bids to Russian exporters.
"Sinopec may only lift a very small amount as their bids were too low for the Russians," a trade source told Reuters.
Sinopec bid for Russian crude at $20 a barrel below the price of the Middle East benchmark price for July cargoes, according to the outlet. Dubai-based trader Coral Energy, state-owned companies CNOOC, PetroChina and Shandong Port International Trade, however, outbid Sinopec for this month's shipments.
Russian ESPO crude is also expected to head to India, which was rarely the case in the past due to long journey times, as buyers there snap up cheaper crude. Earlier this month, four tankers carrying almost 3 million barrels of oil were heading to India, up from three in June, as refiners there buy up alternatives to grades from the Persian Gulf and West Africa.
Since Russia invaded Ukraine, China and India have ramped up their purchases of Russian energy at discounted prices. Meanwhile, Russia has been reeling in handsome profits from its sales in which it made $24 billion in just three months to the end of May from selling energy to the two countries.
But with demand from China dropping, those profits could take a hit. According to new data, China's purchases of Russia oil dropped 14% from May as COVID lockdowns hit the economy again.
The drop-off in Chinese oil purchases raises the issue of whether Russia's economy can successfully find Asian buyers to replace barrels that no longer ship to Europe.