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(Bloomberg) -- Oil refiners in India and China have increased crude purchases from the Middle East and the Atlantic Basin amid concern that further restrictions on imports from Russia and Iran may crimp access to supplies.
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This week, two Indian state refiners bought up to 6 million barrels of Oman and Abu Dhabi’s Murban crude for prompt loading in February, according to traders, who attributed the purchases to a shortfall of Russian spot cargoes. Indian Oil Corp. also snapped up two million barrels of WTI Midland via a tender, according to traders with knowledge of the matter.
Meanwhile, Chinese buyers, including state-owned Unipec, as well as private refiners in Shandong, lifted imports of Angolan. Traders also said a local processor picked up prompt supplies of Abu Dhabi oil.
The surge in buying interest from Indian and Chinese buyers has stemmed not only from fewer and pricier offers of Urals, ESPO and Iranian Light crude, but also from fears of more sanctions on tankers used to transport these cargoes and the implications on refiners and others in the supply chain, traders said.
The apparent shift in purchasing patterns comes at a time when global crude futures have been advancing as Washington continues to tighten curbs on Tehran and Moscow, as well as companies offering logistical and financial assistance to the nations. The Trump administration has threatened to further tighten curbs on Iranian flows, before the US government changeover happens, while outgoing Biden officials have added to restrictions on tankers and pledged to take a tougher stance on Russia.
In China, ports in the eastern Chinese province of Shandong, home to the world’s biggest buyers of Iranian crude, have been urged by their parent company to forbid sanctioned oil tankers from docking or offloading at their terminals, according to people with the knowledge of the directive.
Amid the shifts, Middle Eastern grades have been a key beneficiary due to their medium-sour quality, geographical proximity and readily-available cargoes. France’s TotalEnergies SE, in particular, has become a convenient source of prompt supplies of everything from Upper Zakum to Oman, as the company collates dozens of physical cargoes as a by-product of its active bids on the so-called Platts window.