China’s state-owned oil companies and major private refiners, including Cnooc, Yulong Petrochemical, and Jiangsu Eastern Shenghong, are sending urgent inquiries for the purchase of crude oil to prepare for potential disruptions in fuel supplies due to the escalating sanctions against Russia and Iran, reports Bloomberg, citing traders.
According to the news agency, Beijing is considering the import of various fuels from the Middle East, Africa, and North and South America. The most frequent delivery term in the inquiries is February, the traders clarified.
The measures of some of China’s largest oil buyers are linked to the concern that the productivity of smaller refineries, whose profits had already been declining for a long time before the recent US sanctions, could decrease due to the lack of access to Russian and Iranian fuel at reduced prices, Bloomberg said. If the latter fail, larger players intend to intervene to prevent a shortage of domestic fuel and ensure China’s energy security, the news agency wrote.
On January 10, the US imposed sanctions on Russian companies Gazprom Neft and Surgutneftegaz, as well as their subsidiaries. More than 180 ships, including oil tankers, icebreakers, supply ships, and LNG tankers, that Washington considers part of a “shadow fleet” for the transport of fuels, fell under the restrictions. The sanctions affected, among others, Ingosstrach and AlfaStrachowanie, which insure shipping. The White House described the restrictions on the Russian energy sector as the most significant ever imposed.
As Bloomberg found, these measures have already affected the Asian oil market, and now “buyers, loaders, and port operators are fighting with the consequences.” Reuters, citing traders and analysts, reported that refineries in China and India will be forced to increase their imports from the Middle East, Africa, and America, which could lead to an increase in prices and freight costs. According to the news agency, Russian oil deliveries to China rose by 2% in the first eleven months of 2024 to 2.159 million barrels per day, accounting for 20% of the total imports.