(Bloomberg) -- China has bought millions of barrels of Saudi crude offered via a rare tender and under long-term contracts, although overall purchases still remain well below pre-war levels.
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State-run refiners PetroChina Co. and Sinochem Group, along with Unipec — the trading arm of Sinopec Group — and private processor Rongsheng Petrochemical Co., bought a combined 10 million barrels of Arab Medium and Heavy grades in a tender, said traders familiar with the matter. The oil is for prompt loading.
Separately, refiners including Zhenhua Oil Co. have been allocated at least 14 million barrels of crude for loading next month by state-run Saudi Aramco under annual contracts, the traders added, asking not to be identified as they're not authorized to speak to the media.
The market is keenly watching for any sustained rebound in buying from China, along with a resumption of stockpiling, after the world's biggest importer cut its crude deliveries and reduced refining to cushion the impact of the Iran war. The pullback has helped to prevent a spike in oil prices.
Aramco declined to comment. Rongsheng, PetroChina, Unipec's parent Sinopec, Sinochem and Zhenhua, didn't respond to a request for comment.
In the tender, Aramco offered spot supplies of sulfur-rich crude from locations outside of the Strait of Hormuz for loading as soon as this month. The grades are produced within the Persian Gulf, suggesting the kingdom may be finding ways to move more barrels through the waterway.
That comes as Saudi Arabia and its Asian customers grapple with the logistical challenges created by the war. Aramco's Yanbu port on the Red Sea became a crucial export point after the disruptions at Hormuz, but threats by Iran-backed Houthi militants have raised risks for shipowners. Some tankers are taking longer, costlier voyages around Africa to avoid potential attacks.
Aramco's September allocations to China follow talks with Asian customers on the delivery terms — with some pushing back after being told to load oil from Yanbu. The delivery and pricing terms for Chinese buyers wasn't immediately clear. Pre-war, the Asian nation typically took around 40 million to 50 million barrels a month from Saudi Arabia.
Still, Chinese refiners have shown a growing appetite for Middle Eastern crude. Rongsheng and other buyers have recently purchased Iraqi barrels, while Abu Dhabi National Oil Co. has issued a ninth tender for supplies. Adnoc has been among the most successful producers at keeping oil flowing out of the Persian Gulf during the conflict.
--With assistance from Alfred Cang and Anthony Di Paola.
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