Private Chinese oil refinery Landbridge Petrochemical Co. has made a rare purchase of a shipment of West African oil instead of typical import from sanctioned Iran and Russia, Bloomberg reported on Nov. 14.
The Russian fossil fuel industry is a primary economic driver of Moscow's full-scale war against Ukraine. Ukraine has made a concerted effort to target Russian oil production with long-range drone strikes.
Landbridge Petrochemical Co. purchased the oil at a time when the global oil market is preparing for possible revisions to the U.S. sanctions on Iranian oil in the wake of Donald Trump's election to office.
Global banks suggest that the approach to sanctions could be stricter, Bloomberg reported.
The refinery's move reportedly sparked interest among traders, as small independent refineries in China typically import crude oil from sanctioned Iran and Russia.
Landbridge Petrochemical Co., which recently resumed operations after a long shutdown, bought 2 million barrels, including the Mostarda variety, for delivery in January, Bloomberg reported, citing traders.
Refineries like Landbridge Petrochemical Co., the so-called teapots, have mostly bought Russian ESPO and Iranian crude because they are generally cheaper and have shorter delivery routes. Yet, conditions are changing, making other flows more attractive, according to traders.
Apart from that, the limited supply of spot Iranian oil — given fears of a possible Israeli strike on Tehran's energy infrastructure — is prompting market players to look for oil sources in other countries.
Light Iranian crude was offered to Chinese refiners at a $2 per barrel discount to ICE Brent, down from $3.50 a month ago, traders said.
Oil from eastern Russia from the ESPO pipeline for January loading was offered at a premium of up to $1.80 per barrel, up 50 cents from a month ago.
James Beardsworth
(Updated: )
