Tuesday, January 10, 2012

China buys Russia, Vietnam oil as Iran supply cut

Chinese trader Unipec paid a record premium for a February cargo of Russian crude and bought Vietnamese oil for the first time in at least a year, traders said, as the world's second-largest oil consumer looks to cover for reduced Iranian supplies.

China slashed Iranian crude imports by more than half for January as the two countries haggle over 2012 payment terms, industry sources have told Reuters. The latest deals show that the dispute could be dragging into talks for February cargoes as well.

Tehran is facing tougher sanctions from the West, which could hurt its oil exports into Europe and Asia. That gives top Iranian crude buyer China a strong hand in contract negotiations as one of a shrinking group of customers.

China appears prepared to pay up for alternative crude supplies on short-haul routes to keep Iran under pressure. Unipec, the trading arm of top Asian refiner Sinopec , won the cargoes of Russian ESPO crude from Rosneft by paying nearly a dollar per barrel more than other refiners have paid recently for the same crude.

"They are prepared to pay extra to get supply from Kozmino as crude from West Africa and the Middle East will take a longer time to get there," Roy Jordan, London-based consultant at FACTS Global Energy said, referring to the shipping port for the Russian crude. Read More