Asian buyers continue to buy one of Russia’s key crude grades shipped from the Far East ports as the Sokol cargoes for May loadings for Asia are already sold out, traders told Bloomberg on Thursday.
Crude from the Sakhalin I project, from which operator ExxonMobil said it would withdraw after the Russian invasion of Ukraine, was sold either on a term or spot basis to South Korea, China, and India, Bloomberg’s sources said.
The voyage to deliver a cargo of Sokol to Asia is just a week long because the grade is being loaded from Russia’s Far East ports. Buyers in Japan, South Korea, India, and Chinese independent refiners have reportedly bought Sokol for May loading.
Exxon, for its part, will use its share of Sokol in its own refineries, according to Bloomberg’s sources.
While Chinese independents are buying Russian grades, the largest state-held Chinese refiners are not rushing to purchase heavily discounted Russian crude on the spot market, avoiding being singled out as buyers of Moscow’s oil amid tightening Western sanctions on Russia, Reuters reported exclusively on Wednesday, citing six sources familiar with the issue. China, which has grown increasingly closer ties with Russia in the energy sector of late, has not officially condemned Vladimir Putin’s war in Ukraine, but its government has recently appeared cautious about new spot deals.
In an estimate earlier this week, Wood Mackenzie said that developed economies, allies of the U.S., and the EU are expected to replace around 650,000 barrels per day (bpd) of Russian crude oil with grades from other producers amid self-sanctioning. Yet, the biggest developing Asian oil importers haven’t raced yet to buy heavily discounted Russian crude because of short-term contractual obligations with Middle Eastern producers. China hasn’t shown yet too much appetite for Russian crude because of several factors, WoodMac said. These include expensive freight for Russian cargoes due to the sanctions, challenges with payments and tanker insurance, the fact that a Urals voyage takes double the time compared to Middle Eastern grades going to China, and Chinese refiners’ long-term contracts with oil exporters from the Middle East.
By Tsvetana Paraskova for Oilprice.com
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