Urgent deliveries of Russia’s flagship Urals crude are being offered to Chinese buyers, signalling a shift in the global oil market.

Source: Bloomberg

Details: This development comes as US President Donald Trump ramps up pressure on India over its oil purchases from Moscow.

Urals deliveries scheduled for October arrival are being offered at lower prices, sparking interest among both state-owned and private Chinese refineries, which are currently in talks over the cargoes.

Although China is the top buyer of Russian oil delivered via sea and pipelines, local refineries mostly favour the ESPO grade produced and loaded in Russia’s eastern regions. Urals crude, shipped from western ports, is usually less attractive to Chinese refiners due to geographical distance and higher transportation costs.

Earlier this week, Trump announced that all Indian imports would face doubled tariffs as punishment for continued Russian oil purchases. The move prompted Indian state-owned refineries to halt purchases and seek alternative supplies, freeing up volumes that could now be redirected to China.

Despite this, it remains unclear whether Beijing will be able to absorb the lost Indian demand amid trade tensions with Washington. US Treasury Secretary Scott Bessent has warned that the United States may also impose tariffs on China.

Amid these shifts, traders are negotiating with potential Chinese buyers to supply Urals crude at a premium of US$1.5 per barrel over London Brent – down from the US$2.5 premium seen late last week.

Last month, China’s Shandong Yulong Petrochemical Co. purchased a cargo of Urals crude, a rare acquisition.

Energy Aspects analyst Jianan Sun said although India is sharply reducing spot purchases from Russia, some Chinese refineries have already received several Urals cargoes scheduled for October delivery. He noted, however, that China is unlikely to absorb all the barrels India has abandoned.

Sun added that Urals is not a core grade for China’s state-owned refineries, limiting the country’s interest in strategic stockpiling. He also believes Chinese state companies will remain cautious about buying additional Russian oil amid ongoing US-China trade negotiations.

Background:

Last month, India’s Nayara Energy refinery, which came under European Union sanctions, asked the government for help resolving issues with fuel transportation.President Trump’s additional 25% tariffs on Indian purchases of Russian oil may be just the first blow to Moscow’s energy revenues, as the United States explores ways to pressure Vladimir Putin into ending the war against Ukraine.

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