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Russia remains China’s top crude supplier in July  

Reuter/Essam Al-Sudani
The 90-km pipeline is the main link between the Chevron-operated Leviathan offshore gas field and Egypt

Russia remained China’s largest crude supplier in July, Chinese government data showed on Sunday, even as Russian shipments fall from all-time highs on narrower discounts and rising domestic demand crimps Russian exports.

Arrivals from Russia were up 13 percent from the same month last year to 8.06 million metric tonnes in July, or 1.9 million barrels per day (bpd), according to data from the General Administration of Customs.

For the first seven months of the year, Russian arrivals were up 25 percent from a year earlier to 60.66 million tonnes. Shipments from Saudi Arabia, at 5.65 million tonnes, were down 14 percent from a year earlier and 31 percent from June.

Saudi exports to Asian refiners had been expected to fall in July, as Riyadh raised the July official selling price of its flagship Arab Light crude to Asian buyers to a six-month high.

Saudi Arabia also announced plans for an extra output reduction in July, cutting output to nine million bpd from 9.96 million bpd in June.

Despite continuing Western sanctions and a price cap on Russian shipments, Russian Espo grade crude has increasingly traded closer to benchmark grades, as strong demand from Indian and Chinese buyers erodes the sanctions discount.

July-delivery Espo shipments were priced at a $5-$6 per barrel discount to the Ice Brent benchmark, versus $8.50 against Ice Brent for shipments delivered in March, according to trading sources.

Stronger domestic demand in Russia was also expected to lead to an overall decline in Russian exports. Shipments from western Russian ports in July were estimated to fall 18 percent month-on-month, reflecting resurgent domestic refining demand.

Chinese refiners use intermediary traders to handle shipping and insurance of Russian crude to avoid violating Western sanctions.

Alternative suppliers have seen their shares grow to make up for lower Saudi and Russian shipments. Angola’s shipments grew 27 percent from the previous month to 574,581 bpd in July.