China extended record imports of low-priced Russian crude oil into June despite a lockdown-induced slackening in its total crude oil imports, squeezing out supplies from the Middle East and West Africa, according to tanker trackers and traders.
Russia remained China’s top supplier for the second month in a row, surpassing Saudi Arabia, according to tanker tracking specialists Vortexa, Kpler and Refinitiv.
China is the world’s top importer of crude and Russian oil helps Chinese refiners keep costs down at a time when their margins are crimped by slowing demand from strict COVID-19 controls and Beijing’s restrictions on fuel exports amid supply concerns.
June imports of Russian oil - including seaborne shipments and pipeline supplies - are set to total about 2 million barrels per day (bpd), or 15% of China’s crude demand, on par with May’s record volume, these analysts said.
Meanwhile, overall Saudi oil imports in June are forecast to slump to a near two-year low of 1.3 million bpd, Refinitiv estimated.
Seaborne Russian shipments were estimated at between 1.04 and 1.15 million bpd last month, steady versus May’s near-record high at around 1.1 million bpd, according to the analytics firms.
Separately, China is set to receive approximately 880,000 bpd of Russian oil via the two East Siberia-Pacific Ocean Pipelines (ESPO) and the Kazakhstan-China pipeline under government deals, with all the three projects pumping at maximum rates, said two traders with knowledge of the matter.
Combined, the two countries bought an additional 1 million bpd of Russian oil in May versus April, according to Chinese customs and Indian trade sources. That is equivalent to a fifth of Russia’s total exports, providing Moscow a buffer from western sanctions while bolstering refining profits at home.
China has been able to cut back on supplies from Saudi Arabia and Iraq - likely to fall 40% and 30% month-on-month, respectively - as well as Angola, which could drop a quarter from May, according to assessments by Vortexa and Refinitiv.