Chinese oil refineries, led by heavyweight Sinopec, are set to boost Brazilian crude imports in the third quarter to replace some of the Saudi Arabian supply it cut after the kingdom hiked prices, industry sources said.
China, the world's top crude importer, has booked nearly 1 MMbbl/d of Brazilian crude for August and September delivery, several traders said, of which 20 MMbbl were purchased by Unipec, an arm of Sinopec, the top Asian refiner.
The volumes are significantly higher than the average in the first five months of the year, when China imported 3.02 MMmt of Brazilian crude, or 729,125 bbl/d, Chinese customs data showed.
Sinopec did not immediately respond to a request for comment.
The increase in Brazilian crude purchases comes as Chinese refiners cut volumes from Saudi Arabia, its second-biggest oil supplier, which has hiked most of its crude prices for July and August after the OPEC kingpin volunteered to cut more output.
Saudi's move has tightened sour crude supply globally and strengthened the Middle East Dubai benchmark against Brent, the marker for sweet oil produced in the Atlantic Basin.
The narrow Brent-Dubai price gap, along with lower freight rates and rising production in Brazil, have enabled more oil from the South American producer to be shipped to China, traders said.
"Medium sour Dubai crude has recently priced at unprecedented premia to light sweet benchmark Brent," Goldman Sachs analysts said in a note.
"Prices have now become so dislocated, however, that physical tightness has re-emerged in the light sweet complex, aided by expensive Saudi OSPs (official selling prices) and observable declines to Russian flows."
Spot premiums for Brazilian grades such as Tupi have firmed on Chinese demand.
Tupi, a medium sweet crude, is traded at about $3.50/bbl over dated Brent on a delivered basis to China for September-arrival cargoes, about 50-70 cents higher than the August price, the trading sources said.
China slashed crude imports from Brazil in 2022 when the Ukraine crisis broke out as it gobbled up cheap Russian oil. China's imports from Brazil plunged 17.7% to 498,571 bpd in 2022 from 2021, customs data showed.
Recommended Reading
US Drillers Cut Oil, Gas Rigs for First Time in Three weeks
2024-08-02 - The oil and gas rig count, an early indicator of future output, fell by three to 586 in the week to Aug. 2. Baker Hughes said that puts the total rig count down 73, or 11%, below this time last year.
US Drillers Add Oil, Gas Rigs for Second Time in Three Weeks
2024-07-19 - The oil and gas rig count, an early indicator of future output, rose by two to 586 in the week to July 19, its highest since late June.
US Drillers Cut Oil, Gas Rigs for Second Week in a Row
2024-08-23 - The oil and gas rig count fell by one to 585 in the week to Aug. 23. Baker Hughes said that puts the total rig count down 47, or 7% below this time last year.
US Drillers Cut Oil, Gas Rigs for Second Week in a Row
2024-09-27 - The oil and gas rig count fell by 1 to 587 in the week to Sept. 27, the lowest since early September.
US Rig Count Makes Biggest Monthly Jump Since November 2022
2024-07-26 - The oil and gas rig count, an early indicator of future output, rose by three to 589 in the week to July 26.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.