Why is Sinopec increasing its purchases of Russian oil, and what impact is this having on China's independent refiners?

Sinopec is extending its Russian oil buying binge to lock in higher refining margins, as Russian grades like ESPO are cheaper than alternatives from the Middle East, Brazil, or West Africa—enabling improved domestic processing profits and boosting fuel exports after China eased shipment restrictions. This surge has squeezed supply for independent refiners (teapots), who rely on ESPO for its short shipping distance, reliability, and lower prices but are now forced to buy pricier alternatives like Brazilian, Canadian, or Iraqi oil amid dwindling Iranian shipments due to the U.S. naval blockade; traders report ESPO premiums surged to $10 per barrel for teapots on a delivered basis, and deal discussions for October shipments closed nearly a month earlier than usual.

What specific Russian oil grades is Sinopec buying in October, and how much volume is involved?

Sinopec is buying mostly Russia’s flagship Far East export grade ESPO blend in October, along with smaller volumes of Sokol from Sakhalin Island and Urals loaded from Russia’s European ports; according to estimates by seven traders close to the ESPO trade, Sinopec has agreed to buy between 10 and 15 shipments of ESPO—equivalent to about 235,000 to 353,000 barrels per day—and its total October purchases, including Sokol and Urals, could exceed 20 shipments, three of them estimated.

Sinopec Extends Bumper Russian Oil Buys, Squeezing Independent Refiners, Traders Say

Sep 2, 2026

Sinopec Corp is ramping up Russian oil imports to secure refining margins, causing ESPO premiums to surge and squeezing supplies for independent Chinese refiners facing dwindling Iranian shipments.

reuters

2026-09-02

Sinopec Extends Bumper Russian Oil Buys, Squeezing Independent Refiners, Traders Say

Sinopec Extends Bumper Russian Oil Buys, Squeezing Independent Refiners, Traders Say

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