Russia remained China's largest crude supplier in July, Chinese government data showed, even as Russian shipments fall from all-time highs on narrower discounts and rising domestic demand crimps Russian exports.
Arrivals from Russia were up 13per cent from the same month last year to 8.06 million metric tons in July, or 1.9 million barrels per day (bpd), according to data from the General Administration of Customs.
For the first seven months of the year, Russian arrivals were up 25per cent from a year earlier to 60.66 million tons.
Shipments from Saudi Arabia, at 5.65 million tons, were down 14per cent from a year earlier and 31per cent from June.
Saudi exports to Asian refiners had been expected to fall in July, as Riyadh raised the July official selling price of its flagship Arab Light crude to Asian buyers to a six-month high. Saudi Arabia also announced plans for an extra output reduction in July, cutting output to 9 million bpd from 9.96 million bpd in June.
Despite continuing Western sanctions and a price cap on Russian shipments, Russian ESPO grade crude has increasingly traded closer to benchmark grades, as strong demand from Indian and Chinese buyers erodes the sanctions discount.
July-delivery ESPO shipments were priced at a US$5-US$6 per barrel discount to the ICE Brent benchmark, versus US$8.50 against ICE Brent for shipments delivered in March, according to trading sources.
Stronger domestic demand in Russia was also expected to lead to an overall decline in Russian exports. Shipments from western Russian ports in July were estimated to fall 18per cent month-on-month, reflecting resurgent domestic refining demand.
Chinese refiners use intermediary traders to handle shipping and insurance of Russian crude to avoid violating Western sanctions.
Alternative suppliers have seen their shares grow to make up for lower Saudi and Russian shipments. Angola's shipments grew 27per cent from the previous month to 574,581 bpd in July.
