China doubles Urals oil purchases during first half of Feb- sources, Refinitiv

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MOSCOW — China doubled its purchases of Urals oil in the first half of February compared to the same period of January amid more attractive pricing and as Chinese demand rebounds after COVID-related lockdowns, according to traders and Refinitiv Eikon data.

Urals oil supplies to China are rising as freight rates soften and the Brent-Dubai spread narrows, making Brent-related Urals oil more competitive compared to Dubai-related grades in Asian markets, traders said.

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China and India are buying at deep discounts amid Western sanctions on Russian oil and more recently, embargoes and price caps.

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Traders said that Chinese companies are becoming more active in the Urals market as business in China rebounds from COVID-related lockdowns last year.

About 0.8 million tonnes of Urals oil loading from Russian ports during Feb. 1-15 are heading to China compared to some 0.4 million tonnes of the grade during the same period of January, according to traders and Refinitiv Eikon data.

“Buyers from China are getting more and more active, competing more with Indian refineries,” one of the traders said adding that this may support prices for March-loading Urals oil.

Chinese refiners buy Urals oil straight from the Russian ports or from ship-to-ship (STS) facilities in the Mediterranean or elsewhere, traders said. Some of the ships are initially heading to Singapore, but will most likely end their voyage in Chinese ports, one of the traders said.

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India still remains a leader in Urals oil purchases: about 1.5 million tonnes of Urals oil loading in the first half of February are heading to Indian ports. During the first half of January India received about 1.9 million tonnes of seaborne Urals oil, according to Refinitiv Eikon.

Other seaborne Urals oil cargoes loading in the first half of February are headed to Turkey and Bulgaria, while destinations of several cargoes remain unknown.

Seaborne supplies of Urals crude bound for China in January rose to some 230,000 barrels per day (bpd), the highest level since June 2022.

China’s commerce ministry has met independent oil refiners to discuss their deals with Russia and if they were encountering any obstacles, five sources with knowledge of the matter said. (Reporting by Reuters; Editing by Susan Fenton)