September 11, 2019 / 12:40 PM / 7 days ago

Kazakh CPC oil exports to Asia spike in Sept as China tariffs hit U.S. oil

MOSCOW/SINGAPORE, Sept 11 (Reuters) - Kazakh CPC Blend crude oil BFO-CPC supplies to Asia are set to reach an all-time high in September as China increases the grade's purchases to replace U.S. crude it slapped with tariffs this month, according to trading sources and loading data.

In its trade war with Washington, Beijing imposed a 5% tariff on U.S. crude imports from Sept. 1, which led to a decrease in China's purchases of American barrels.

CPC Blend crude oil supplies to Asia are just above 2 million tonnes (some 520,000 barrels per day) for September delivery, above the previous record of 1.7 million tonnes (430,000 barrels per day) reached in December 2018, according to Refitiniv Eikon data.

The final amount may exceed 2 million tonnes this month as shipping data for this month is being updated.

South Korea remains the main importer of the grade as its refiners tend to replace condensate with the CPC Blend. In September, the country plans to import some 1 million tonnes, according to the Refitiniv Eikon data.

Meanwhile China, a rare taker of CPC Blend, was the second largest buyer of the grade among Asian nations, taking at least 500,000 tonnes for delivery this month, a record high of its CPC Blend imports so far, according to the data.

The rest of the 2 million tonnes of the CPC Blend this month are supplied to Singapore and India, which import small amounts of the grade regularly.

China's Unipec, a trading arm of China's Sinopec, was the buyer of CPC Blend for delivery to China, two trading sources familiar with the matter said.

"Unipec was optimising its crude oil choices as African grades were costly while the Brent-Dubai spread was narrow. There is also a tariff on U.S. oil," one of the sources said.

Sinopec declined to comment.

"As China has to reduce offtake of the United States crude due to the trade war, they now look for alternative lights", the second trader who works with CPC Blend said. "China used to buy a little amount of CPC, just a number of irregular purchases. Now given the market situation it became an option."

Exports of CPC Blend, which consists mainly of the Kazakh crudes with smaller amounts supplied by Russia's Lukoil and Rosneft, are gradually rising as Kazakhstan is increasing its crude oil production.

Reporting by Olga Yagova in MOSCOW and Florence Tan in SINGAPORE; Editing by Katya Golubkova and Emelia Sithole-Matarise

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