Chinese refiners, led by Sinopec, are set to increase imports of Brazilian crude oil in the third quarter to replace some of the Saudi Arabian supply they cut after the kingdom raised prices, industry sources said.
China, the world's top oil importer, has booked nearly 1 million barrels per day of Brazilian crude for August and September delivery. Sinopec's Unipec arm purchased 20 million barrels. This is significantly higher than the first five months of 2022, when China imported an average of 729,125 bpd of Brazilian crude.
The increase comes as Chinese refiners cut volumes from Saudi Arabia, China's second-biggest oil supplier, after Riyadh hiked prices for July and August. This has tightened sour crude supply and strengthened Middle East Dubai crude against Brent crude.
Lower freight rates and rising Brazilian production have made South American oil more attractive. Spot prices for Brazilian grades like Tupi have risen on Chinese demand, trading around $3.50 above dated Brent for September cargoes.
In 2022, China slashed Brazilian crude imports when the Ukraine crisis broke out and it purchased cheap Russian oil. Imports from Brazil fell 17.7% year-on-year in 2022.
