China’s independent refiners are expected to ramp up imports as they seek to use up import quotas before they expire at the end of the year. Analysts said that would likely boost imports of ESPO crude grade as it could be delivered less than a week from Russia’s Far East region. However, ESPO spot premiums have surged to their 21-month high, which could prompt these refiners to seek other grades from the Middle East.
These private refiners, known as teapots, are also expected to boost purchases of Iranian crude currently floating in tankers across Chinese, Singaporean, and Malaysian waters. Teapots can also seek alternatives such as Oman and Upper Zakum, traders said. However, it usually takes up to three weeks to ship oil from the Persian Gulf to Chinese ports, presenting uncertainty whether they could be delivered before the quotas expire.
