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India, China Import Record Russian Crude Oil In May
The jump in Russian supplies comes ahead of a meeting between the Organisation of the Petroleum Exporting Countries and their allies including Russia on 4 June
Photo Credit : Reuters
Russian crude oil imports by China and India in May hit an all-time high as buyers gorged on discounted supplies, reducing demand for oil from the Middle East and Africa, according to preliminary assessments from ship trackers.
The jump in Russian supplies comes ahead of a meeting between the Organisation of the Petroleum Exporting Countries and their allies including Russia on 4 June.
Producers face some pressure to act to support Brent futures which have fallen 5 per cent this week to about USD 73 a barrel despite an OPEC+ pledge in April to cut more output from May.
However, despite lower prices, four sources from the alliance told Reuters, they are unlikely to deepen supply cuts at the Sunday meeting.
The world's No. 1 and No. 3 crude importers and top buyers of Russian oil imported about 110 million barrels in May, data from Vortexa and Kpler showed, up nearly 10 per cent from the prior month despite US warnings against price cap evasion.
Arrivals of Russian shipments in India are assessed to have reached a record high of 8.6 million tonnes (62.8 million barrels) while China received 6 million tonnes, steady from April, according to Vortexa.
Data from Kpler showed a similar trend, with India's imports hitting a record of 66.7 million barrels and China's rising to 49.2 million barrels.
Indian refiners stepped up purchases of medium sour crude Urals and lighter grades such as Sokol and Varandey, in addition to a steady inflow of ESPO crude exported from the Pacific port of Kozmino, the data showed.
In China, refiners are scrambling to cut feedstock costs and improve refining margins amid a slower-than-expected economic recovery. Large private oil refiners started buying Russian oil earlier this year and have increased volumes in recent months.
“We see more new buyers from China these days,” said an official with a Russian oil company.
Private refiner Hengli Petrochemical, which operates a 400,000-barrel-per-day refinery in northeast Dalian, received its first Urals crude cargo of 730,000 barrels in early May. Another 2 million barrels arrived on Wednesday night, the ship tracking data showed. Hengli also bought 3.71 million barrels of ESPO that came in the same month.
Hengli did not immediately respond to a Reuters request seeking comment.
“Chinese buyers' increased demand for Russian oil loading in April and beyond was supported by higher profitability of supplies amid softer freight and firmer differentials,” said a trader involved in Russian oil marketing.
The lumpsum freight rates for tankers carrying ESPO crude from Kozmino to northern China fell to USD 2.2 million after hitting an all-time high of USD 2.4 million in mid-March, Simpson Spence Young data on Refinitiv Eikon showed.
Spot premiums of July-loading Middle Eastern crude benchmark Oman and Dubai in May versus April fell by 47 per cent and 41 per cent, respectively.