Key facts
- Chinese refiners are buying West African and Brazilian crude as freight rates ease.
- Purchases are at premiums of up to $20 per barrel above ICE Brent for December delivery.
- Shipping costs from key routes have eased by about $10 per barrel from early October highs.
- Competition for Russian ESPO grade has pushed its prices higher.
- Iranian crude is unavailable to independent Chinese refiners due to U.S. actions.
Chinese refiners are increasingly turning to West African and Brazilian crude oil as shipping rates have eased from record highs, making these alternative supplies more economically viable. This shift is occurring as competition for Russian grades intensifies and Iranian crude becomes unavailable due to U.S. actions. The cost of shipping crude from the U.S. Gulf Coast to Asia had previously soared to as high as $80 million, prompting refiners to seek alternatives. Despite a recent easing, freight rates remain elevated, influencing purchasing decisions.