Russia beat Saudi Arabia as China’s top crude oil supplier in March, a follow-on to taking the No.1 spot in four months of 2015, customs data showed on Thursday, due to strong purchases from the Chinese independent refineries known as “teapots”.
Shipments from Russia rose 58 percent last month from a year ago to 1.09 million barrels per day (bpd), data showed. This compared with February volumes from Russia at 1.03 mln bpd and an all-time high at 1.13 million bpd in December.
But demand for Russia’s main export grade ESPO is expected to soften in the second quarter as rising crude prices squeeze refiners’ margins and China’s independent refiners experiment with other suppliers.
“ESPO demand will ease in the second quarter as refineries see it as relatively costly,” said a senior Beijing-based trader who deals with teapots, adding that the buyers might be attracted by cheaper grades from West Africa and Brazil.
The weakening sentiment for the ESPO grade was reflected in its premium narrowing to $2.1 a barrel over Dubai quotes in the last month, from a premium of $5.5 a barrel previously.