cross-posted from: https://lemmy.sdf.org/post/40060947

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• Prompt supplies of Russia's Urals crude are being offered to Chinese buyers at cheaper prices, garnering interest from state and private refiners.
• Chinese imports of Urals are not typically part of processors' regular appetite due to geographical distance and high freight costs, but China is seen as a viable alternative market.
• Jianan Sun, an analyst with Energy Aspects, said China will unlikely be able to absorb all Russian barrels backed out from India, as Urals is not a base-load grade for Chinese state-owned refineries.

Prompt supplies of Russia’s flagship Urals crude are being offered to Chinese buyers, a sign of shifts in the global oil market as President Donald Trump takes aim at India over its purchases from Moscow.

Urals shipments for October arrival are being touted to buyers at cheaper prices, garnering interest from state and private refiners who are currently negotiating for cargoes, according to traders with direct knowledge of the talks, who asked not to be identified as they aren’t authorized to speak publicly.

While China is the no. 1 buyer of Russian oil delivered by sea as well as land routes, local refiners predominantly take ESPO, a grade that’s produced and loaded from the eastern part of the country. Chinese imports of Urals, which ships from ports in the west, are not typically part of processors’ regular appetite given the geographical distance and high freight costs.

[...]

While China — with its vast refining system as well as strategic petroleum reserves (SPR) appetite — is seen as a viable alternative market for Urals, it’s unclear if Beijing would pick up the slack amid trade tensions with Washington. Treasury Secretary Scott Bessent said the US may also impose tariffs on China, when asked about targeting countries that buy Moscow’s energy.

[...]

Urals cargoes are being discussed with potential Chinese buyers at premiums as low as $1.50 a barrel to London’s Brent, down from a differential near $2.50 late last week, the traders said. Companies offering these shipments include Russia-affiliated traders such as Litasco.

Traders said between five and 10 cargoes of Urals have been purchased by Chinese buyers in recent days, although this could not be verified by Bloomberg.

[...]

Last month, Chinese refiner Shandong Yulong Petrochemical Co., bought Urals in a rare move

“While India substantially reduces spot Russian buying, some Chinese refineries picked up a few cargoes for Urals for October delivery,” Jianan Sun, an analyst with Energy Aspects wrote in an Aug. 7 note. “But China will unlikely be able to absorb all Russian barrels backed out from India.”

Sun added: “Urals is not a base-load grade for Chinese stated-owned refineries, limiting the country’s interest in stockpiling the grade strategically. We also think Chinese SOEs will be cautious about taking extra Russian barrels amid US–China trade negotiations.”