Beijing buys more crude oil from Russia and US

BEIJING — Russia remained China's top oil supplier in November despite elevated prices for Russian crude, data showed on Wednesday, as Saudi supply cuts continue.

China’s imports from Russia, including supplies via pipelines and seaborne shipments, totalled 9-million metric tons, or 2.19-million barrels per day (bpd) last month, according to data from the General Administration of Customs.

Russian shipments rose 9% from October’s 2.01-million bpd, reversing monthly drops in October and September, and were up 15.2% from a year earlier. Russian crude imports for the first 11 months of 2023 were up 22.2%, the data shows.

Shipments from Saudi Arabia totalled 6.61-million tons, or 1.61-million bpd, down 0.2% from a year earlier. Saudi Arabia previously raised prices for its Arab Light crude from July to November for Asian refiners. That prompted some Chinese refiners to reduce their Saudi shipments and shop elsewhere for cheaper supplies in the spot market.

Riyadh's unilateral 1-million bpd output cuts are to continue to the end of the year, with Moscow also having pledged to extend export cuts of 300,000 bpd until the end of the year. These cuts were extended and deepened at the November meeting of the Organization of Petroleum Exporting Countries and its allies (Opec+).

Saudi Arabia announced it would roll over its cut into the first quarter of next year. Russia said it would deepen its cut to 500,000 bpd. Sanctioned Russian crude continued to attract a premium in November, as Chinese refiners compete with those in India to secure shipments and the Group of Seven’s $60 price cap struggles to maintain effectiveness as alternative shipping and insurance options multiply.

ESPO crude shipments for November delivery were priced at a premium of about $0.50 per barrel to the ICE Brent benchmark, versus a $1 premium for October delivery cargoes and an $8.50 discount for shipments delivered in March, according to trading sources.

Chinese refiners use intermediary traders to handle the shipping and insurance of Russian crude to avoid contravening Western sanctions over the Ukraine war.

Imports from Malaysia, used as a trans-shipment point for sanctioned cargoes from Iran and Venezuela, fell month-on-month to 3.92-million tons, or 950,000 bpd in November, as the independent refiners who primarily buy these cargoes scaled back imports because of lower profit margins. Still, Malaysian volumes year-to-date are up 66.5% from 2022’s matching period.

China reported no official shipments of Venezuelan crude in November despite an easing of US sanctions on Caracas in October after a deal between the Maduro administration and its political opposition.

In spite of tension between Beijing and Washington, increased US crude output means that China continues to import more US oil.

China imported 1.06-million tons of American crude in November, with year-to-date volumes up 82.4%. China's total crude imports in November posted the first year-on-year drop since April, falling 9.2% from a year earlier amid slowing orders from independent refiners and high inventory levels.

Reuters