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China’s Sinopec Snubs Geopolitics, Looks To Diversify Crude Sourcing

Despite the ongoing U.S.-China trade war and the upcoming U.S. sanctions on Iran’s oil exports, China’s and Asia’s biggest refiner, Sinopec, will continue to buy crude oil from both the United States and Iran as it was more interested in diversifying its crude sourcing base, a senior Sinopec official said this week in one of the company’s first public comments about the various geopolitical issues on the oil market these days.

“About 85% of our feedstocks are imported from overseas. We need to diversify,” Sinopec’s vice president Huang Wensheng said at an earnings briefing in Hong Kong, quoted by S&P Global Platts.

The United States, which aims to bring Iran’s oil exports to ‘zero’, hasn’t been able to persuade Tehran’s biggest oil customer, China, to reduce oil purchases, but Beijing has reportedly agreed not to increase its oil imports from Iran.

Sinopec takes around two-thirds of China’s oil imports from Iran, according to S&P Global Platts data. Last year, Iranian crude accounted for 8.6 percent of Sinopec’s total crude oil throughput, Platts quoted filings to the SEC as saying.

“Some of our downstream refineries were designed for refining Iranian oil,” Sinopec’s Huang said. “If we stop imports, the benefits would be affected.”

Regarding U.S. crude oil, which China left out of the list of American products on which it slapped tariffs last week, Sinopec will continue to buy U.S. oil under term contracts, the manager said, noting that the trade dispute has had no impact on the company’s business.

Sinopec’s international trading arm Unipec will resume U.S. crude oil purchases from October, three sources told Reuters last week on the condition of anonymity. The company had suspended crude oil imports from the United States amid the trade spat between Washington and Beijing in anticipation of crude oil making it onto the tariff list. When this did not happen, Unipec started buying U.S. crude again despite the trade dispute escalation that saw China slap 25-percent tariffs on U.S. oil products and coal.

By Tsvetana Paraskova for Oilprice.com

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