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SINGAPORE, March 2 (Reuters) - China's seaborne imports of Russian oil are set to hit a record this month after refiners took advantage of cheap prices as domestic fuel demand rebounded, but Russia's plan to cut exports will likely cap buying in coming months.
Hefty Chinese buying, alongside robust Indian demand, has been spurred by steep price discounts but is providing Moscow much-needed revenue after the Group of Seven imposed a $60 price cap on Russian crude.
"Price is the king," said a purchasing manager for a Shandong-based refinery.
Tanker tracking consultancies Vortexa and Kpler estimated nearly 43 million barrels of Russian crude oil, comprising about at least 20 million barrels of ESPO Blend and 11 million barrels of Urals, are set to reach China in March.
The previous high for Russian seaborne crude imports was 42.48 million barrels in June 2020, shiptracking data showed.
The data also pointed to record arrivals of rarely bought oil from Russia's Arctic, with three tankers carrying about 3.15 million barrels due to reach China this month, after 2.7 million barrels landed in February.
China, Russia's largest oil buyer including via pipelines, has been taking steady volumes of ESPO crude as refiners - mostly its independent plants - favour the oil's high quality and proximity. ESPO Blend is a light, low sulphur grade exported from Far East ports.
State refiners, however, scaled back buying Urals crude in late 2022 due to worries about sanction risks after Western governments imposed a price cap on Russian oil imports and implemented embargoes over Moscow's invasion of Ukraine.
State-owned PetroChina and Sinopec recently resumed buying Urals - a medium heavy, high sulphur crude loaded from Russia's European ports - after receiving permission from their headquarters, looking to boost refining margins.
The March imports include shipments carried by at least two Chinese-owned supertankers that transshipped Urals from smaller vessels loaded at Russia's Western ports.
Most of these cargoes were bought by China's independent refiners, which are larger customers of seaborne Russian oil than the state importers.
SHRINKING DISCOUNTS
Refiners were attracted by low prices with March-arriving Urals heard traded at a $13 a barrel discount against ICE Brent on a delivered ex-ship (DES) basis.
The discounts have widened to $14 a barrel for April-delivery cargoes, which are $2 cheaper than similar quality Oman crude, traders said.
However, solid demand is likely to push up prices and drive down the steep discounts, a China-based oil trader said.
That is already happening for April-arrival ESPO to China, with the discount narrowing to about $7.50 to $7 a barrel against ICE Brent, from $8.50 for March shipments.
At the same time, free-on-board (FOB) prices at Baltic ports have jumped on talk that Russia is considering lowering exports to bolster prices.
The tighter discounts on crude at Baltic ports, limited shipping capacity and continued Indian demand could diminish China's appetite for Urals, a Chinese Urals dealer said.
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China's March imports of Russian oil may hit record - shiptracking data - Reuters
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