Opposing positions: A man works on a Sinopec signage at a gas station in Huai’an. PetroChina’s Hong Kong entity has been bidding – and purchasing cargoes as a result of its bids – while Sinopec’s Unipec has been offering and selling shipments in Dubai. — AP
BEIJING: Two giants in China’s oil and refining sector have taken the biggest opposing positions in Middle East crude trading in years, transforming global cargo flows and puzzling oil traders the world over.
Throughout this month, Dubai crude has fluctuated heavily, largely due to aggressive bidding and offering from the trading units of Chinese oil refiners, PetroChina Co and Sinopec.
They’re respectively the nation’s biggest oil company and its top refiner. This has only intensified with time.
Public clashes between China’s state-owned behemoths are uncommon, and in this instance the firms’ activity in the main Middle East oil price benchmark is particularly peculiar because both are big refiners who should, in theory, be eager to obtain crude as cheaply as possible.
Instead, PetroChina’s Hong Kong entity has been bidding – and purchasing cargoes as a result of its bids – while Sinopec’s Unipec has been offering and selling shipments.
Nobody replied to emails sent to PetroChina and Sinopec’s media departments seeking comment.
This month, more than a thousand derivatives contracts have traded in the vital pricing window that sets the Dubai price – close to triple the monthly average in 2023 and the biggest volume for years.
At least 10 other traders said the activity – surprising to all, given normal patterns for Chinese entities – made it harder to ascertain the true strength of the Middle East oil market, a pivotal part of the petroleum supply chain, as well as China’s state of recovery.
The price of Dubai oil forms the basis of almost all exports from the Middle East, including Saudi Arabia. That means any strength or weakness in the price of the grade translates directly to the affordability of oil purchases from across the region, and how many barrels flow from elsewhere in the world to Asia.
The surge has also likely helped to boost markets for oil that is similar to the types found in the Middle East. Norway’s Johan Sverdrup jumped by about US$1 (RM4.66) a barrel after Unipec purchased the grade.
Traders said changes in global cargo flows might not have taken place without the spike in Chinese activity. — Bloomberg
