Sinopec Ramps Up Russian ESPO Crude Purchases to Offset Middle East Supply Cuts
Claire Weston
Sinopec has booked 30–40 cargoes of Russian ESPO crude for July–September delivery — up to 320,000 barrels a day — to plug the gap left by the Iran war, while Saudi purchases have crashed to less than a fifth of pre-war levels.
How much Russian oil, and where is it going?
Sinopec locked in 30–40 cargoes of ESPO blend for July–September, equivalent to 241,000–320,000 b/d — roughly 5–6% of its 5.2 million b/d refining capacity.
July alone totalled about 7.4 million barrels, most of it discharged at Rizhao port in Shandong. At least 10 cargoes are booked for each of August and September.
This means → ESPO has shifted from an occasional top-up to Sinopec's primary marginal supply source this summer.
Why is Russian crude suddenly in such demand?
September-loading ESPO is priced at a $1–2/barrel discount to Brent — roughly $10/barrel cheaper than Middle Eastern Oman crude or Brazilian Tupi.
Before the war, ESPO traded at about a $10/barrel discount to Brent. That gap has narrowed sharply. This reflects a supply-demand flip as buyers compete for cargoes.
In plain terms = Russian oil is still sold at a discount, but the discount is much smaller than before — more buyers chasing the same barrels.
How far has the Saudi share fallen?
Sinopec bought zero Saudi crude in June and July. August purchases totalled just 2 million barrels, far below the 20 million barrels booked in each of March and April.
Pre-war, Sinopec averaged about 11 million barrels a month from Saudi Arabia. The August figure is less than one-fifth of that.
This means → Saudi Arabia's status as a default supplier to China's largest refiner is eroding fast, displaced by cheaper Russian barrels.
How is Sinopec navigating sanctions risk?
Sinopec halted Russian purchases last October after the U.S. sanctioned Rosneft and Lukoil, then resumed with about 10 cargoes during a temporary U.S. waiver in March–April.
Recent purchases involve no sanctioned entities. All deals go through intermediaries and settle in renminbi.
In plain terms = Sinopec avoids dealing directly with sanctioned companies — it uses middlemen and pays in yuan to stay on the legal side of the sanctions line.
What determines second-half profitability?
China's overall crude imports fell 41% year-on-year in June, but Beijing has eased fuel-export curbs for July–August, and Sinopec's refining demand is rebounding from the trough.
Analysts note the recovery is "selective" — demand is shifting toward grades with higher delivery certainty and lower freight, and ESPO — a short-haul Far East cargo — fits perfectly.
This means → whether Sinopec can keep filling the Middle East gap with discounted Russian crude and sustain refinery utilisation is the key variable for its second-half earnings.
Content is for reference only, not financial advice.