China’s Unipec, the trading arm of top Asian refiner Sinopec, has emerged as a major seller of August-loading Oman crude this month, according to a new report. The move has helped cap benchmark prices despite plans by a key Opec member to cut output next month.
Unipec has sold 8 million barrels of Oman crude since the start of June on S&P Global’s trading platform, Reuters said. This is a significant increase in sales compared to previous months. Unipec’s decision to sell large volumes of Oman crude is likely due to tepid fuel demand from a slower-than-expected economic recovery that has squeezed refining margins in China. Additionally, Unipec and other Chinese refiners have been bringing in more barrels from Russia, West Africa, the United States and Brazil.
Oman crude is a medium-grade crude oil that is produced in the Sultanate of Oman and is similar in quality to Dubai crude oil. It is used as a benchmark for pricing Middle Eastern crude oil exports to Asia. Unipec’s decision to boost Oman crude sales could be seen as an attempt to diversify its crude oil supply sources and reduce its reliance on Saudi Arabia, say experts.
China has been the top importer of Oman crude, reaching almost 85 per cent of Oman’s total crude oil production. By end of April 2023, China imported 93.1 million barrels of oil, according to data issued by the National Centre for Statistics and Information (NCSI).
Unipec’s move has helped cap benchmark prices despite Saudi Arabia’s plans to cut output next month. Saudi Arabia has announced that it will cut its oil output by 1 million barrels per day (bpd) in June and July 2023. However, Unipec’s sales of Oman crude have helped offset the impact of Saudi Arabia’s production cuts on benchmark prices.
Unipec sold the Oman cargoes to Totsa, trading arm of TotalEnergies, PetroChina Hong Kong, Shell and Trafigura, the data collated by Reuters showed.
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