CHINA DATA: Russian crude imports up 24% to 2.15 mil b/d in 2023

China's crude oil imports from Russia in 2023 jumped 24% to 2.15 million b/d (107 million mt), making it the top supplier to Asia's biggest oil consumer, General Administration of Customs data showed Jan. 20.

Russia expanded its market share from 17% in 2022 to 19% to remain ahead of Saudi Arabia, which was China's second-largest supplier with 1.73 million b/d, down 1.7% on year.

Overall, China's crude imports in 2023 rose 11% to 11.33 million b/d.

CFR prices of Russian barrels averaged $77.3/b in 2023 amid the $60/b FOB price cap on Russian crude set by the G7, while Arabian crudes' CFR prices averaged $85.52/b, the GAC data showed.

Healthy demand for Russian barrels

China's interest in Russian crude has remained healthy heading into 2024.

A London-based market analyst expects the volume in January will rise further from the four-month high of 2.26 million b/d seen in December, amid increasing Sokol and Urals cargoes diverted from India.

Moreover, small independent refineries found ESPO more attractive as the spread against Iranian Light recently fell below $5/b, supporting Russian shipments in the first quarter of 2024.

The strong crud flows are coming despite the G7 announcing it was tightening its price cap rule, and the US just took its first enforcement action of the year related to Russian oil, sanctioning a shipping company based in the United Arab Emirates with 18 ships that have repeatedly made calls to Russian ports.

Arabian crude imports should recover in January from a half-year low of 1.42 million b/d in December, data from S&P Global Commodities at Sea showed.

The 12% month-on-month reduction in December was likely due to a combination of shipping delays and a reduction in November nominations, market sources said. Middle Eastern cargoes usually take about 25-35 days to reach China.

Chinese refiners would increase nominations in March for Arab crudes after Saudi Aramco turned to cut its January and February Asia-bound OSPs, which sources at state-run refineries welcomed.

"But it is unlikely to see an increase in nomination until the March-loading program starts, if Aramco keeps the cut, as Chinese refineries have fixed their feedstock for January/February," a Dubai-based trader with a Chinese refiner said.

Middle Eastern market share down

Led by the OPEC kingpin, China's crude imports from Middle East in 2023 fell 2.4% to 5.25 million b/d, taking the market share of the oil-rich region to 46.3% from 52.7% in 2022.

The shortfall was not only met by Russia but also by other nations such as Malaysia, Brazil and the US, whose crude shipments rose 54%, 51% and 81%, respectively, from 2022, GAC data showed.

The increased Brazilian and US crude exports were supported by a narrow Brent-Dubai exchange of futures for swaps contract -- which indicates relative value between Brent-priced crudes compared to Dubai-priced grades amid higher OSPs. The low level opened arbitrage opportunities to ship barrels to China from the Americas.

But a rise in freight costs on the USGC-Asia route versus the Middle East-Asia voyage saw American grades become less competitive, a trading source with Unipec said.

Sources said Chinese independent refineries imported Iranian and Venezuelan crudes, which were declared as Malaysia-origin, pushing up the volumes reported from the country in the GAC data. No Iranian or Venezuelan crude imports were in the GAC data.

In early January, ChemChina will discharge about 150,000 mt of Merey crude for its Changyi Petrochemical subsidiary. It will be not only the first Venezuelan crude cargo that the state-owned company has bought but also the first barrel from the Latin American producer that GAC has recognized since 2019.

Crude cargoes declared as Malaysia-origin are set to fall in 2024 amid the sanction relief on Venezuelan barrels, although the barrels from Iran are expected to continue.

China's top crude suppliers (million mt)

Source: General Administration of Customs