China's Russian oil imports to hit new record in February as India cuts back

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• China's Russian oil imports to hit record high in February
• Imports rise as independent refiners buy discounted Russian crude
• India cuts Russian oil imports, boosting China's share

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China's Russian oil imports are set to climb for a third straight month to a new record high in February as independent refiners snapped up deeply discounted cargoes after India slashed purchases, according to traders and ship-tracking data.

Russian crude shipments are estimated to amount to 2.07 million barrels per day for February deliveries into China, surpassing January's estimated rate of 1.7 million bpd, an early assessment by Vortexa Analytics shows.

Kpler's provisional data showed February imports at 2.083 million bpd, up from 1.718 million bpd in January.

China has since November replaced India as Moscow's top client for seaborne shipments as Western sanctions over the war in Ukraine and pressure to clinch a trade deal with the US forced New Delhi to scale back Russian oil imports to a two-year low in December.

India's Russian crude imports are estimated to fall further to 1.159 million bpd in February, Kpler data showed.

That has depressed Russian oil prices to a discount of $9 to $11 a barrel below benchmark ICE Brent for January/February deliveries to China, the lowest in years for Urals, a grade loaded from European ports that has typically landed in India due to shorter voyages versus China.

Urals as well as other export grades such as Sokol and Varandey piled onto regular shipments of Russia's flagship ESPO blend exported from the Far East port of Kozmino located closer to China, creating strong competition versus rival supplies from Iran.

Threat of US strikes on Iran spook 'teapots'

Independent Chinese refiners, known as teapots, are the world's largest consumers of US sanctioned oil from Russia, Iran and Venezuela.

"For the quality you get from processing Russian oil versus Iranian, Russian supplies have become relatively more competitive," said a senior Chinese trader who regularly deals with teapots.

ESPO blend last traded at $8 to $9 a barrel discounts to ICE Brent for March deliveries, while Iranian Light, a grade of similar quality, was last assessed at $10 to $11 below ICE Brent, the trader added.

Uncertainty since January over whether the US would launch military strikes on Iran if negotiations for a nuclear deal failed to yield Washington's desired results curbed buying from Chinese teapots and traders, said Emma Li, Vortexa's China analyst.

“We want to set the Venezuelan people and the economy free."

"For teapots, Russian oil looks more reliable now as people are worried about loadings of Iranian oil in case of a military confrontation," Li said.

Part of the elevated Russian oil purchases came from larger independent refiners outside the teapot hub of Shandong, Li added.

Vortexa estimated Iranian oil deliveries into China - often branded by traders as Malaysian to circumvent US sanctions - eased to 1.03 million bpd this month, down from January's 1.25 million bpd.