Apparent drone attacks in Moscow…
Libya is revamping its oil…
Russia continued to be China’s biggest crude oil supplier in July for a fifth consecutive month, while Chinese refineries have been taking in more Brent-price-linked West African crude at the expense of sour Middle Eastern varieties as OPEC’s cuts led to narrower price differentials making African oil more attractive for buyers.
China’s crude oil imports from Russia averaged around 1.17 million bpd in July, a 54-percent surge compared to the same month last year, according to data by China’s General Administration of Customs cited by Reuters.
Total Chinese imports last month stood at 8.18 million bpd, down compared to June, but up 12 percent year-on-year. Year-to-date, China’s crude imports rose 13.6 percent to 8.51 million bpd.
Down in the suppliers’ list behind Russia came Saudi Arabia and Angola—China’s no.2 and no.3 crude oil providers in July, respectively. Chinese imports from Saudi Arabia inched down 0.8 percent annually to around 940,000 bpd, while imports from Angola dropped 17.1 percent to 921,520 bpd.
Year to date, however, Angola kept its spot as China’s second-biggest supplier for a third straight month with shipments up 15 percent in January-July.
As early as the start of OPEC’s production cuts, reduced supplies resulted in higher prices for Middle Eastern crude benchmark Dubai and a narrower Brent/Dubai spread, which made the shipment of Brent-price-linked crude grades to Asia profitable.
On the other hand, independent refiners in China – the so-called teapots—not bound by long-term supply contracts with Saudi Arabia—have been replacing the Middle Eastern grades with Urals, a Russian grade with qualities similar to the Oman crude grade and with even better refining economics, according to traders.
Related: The Latest Red Flag For U.S. Shale
Urals, which is priced against the Brent, is now a business-feasible opportunity for smaller Chinese refiners, after the rise in Middle Eastern benchmarks.
Chinese refinery demand helped Russia to outstrip Saudi Arabia to take the top spot in crude exports to China last year. Russia’s exports jumped 25 percent annually to 1.05 million bpd in 2016, compared to Saudi Arabia’s shipments of 1.02 million bpd, inching up just 0.9 percent.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.