SINGAPORE/NEW DELHI (Reuters) – China’s Unipec is reselling some of the crude oil it imports from the United States to buyers in India and South Korea to avoid tariffs Beijing imposed in its trade war with the U.S., three sources with knowledge of the matter said on Thursday.
Unipec, the trading arm of Asia’s top refiner China Petroleum & Chemical Corp, or Sinopec (600028.SS), is China’s main buyer of U.S. crude, but its imports have been disrupted after Beijing placed a 5% tariff on U.S. crude imports from Sept. 1.
The sales to South Korea and India are an “unusual move” for Unipec and directly triggered by the tariffs, the sources said.
More Asian refiners are buying U.S. crude because of tighter supply caused by U.S. sanctions on Iran and Venezuela.
Sinopec declined to comment.
To mitigate losses from the tariffs, the company has also sought waivers from Beijing for its U.S. crude oil imports in September and October, Reuters reported last month.
Unipec, which usually imports 6 million barrels of U.S. crude such as West Texas Intermediate (WTI) Midland crude to China per month, is reducing imports to around 2 million barrels on average each month for September and October when the tariffs start, one of the sources said.
It initially planned to store more of the oil in bonded tanks, but then moved to re-sell the oil to other U.S. oil buyers in Asia, namely India and South Korea, the person said. It was not immediately clear what led to the change.
“Unipec offered U.S. cargoes that they’ve already purchased to South Korean refiners after the U.S. new tariffs kicked in,” another one of the sources said.
The very large crude carrier (VLCC) Dorra was chartered by Unipec and loaded U.S. crude last August and is now heading to the South Korean port of Yeosu, according to ship tracking data on Refinitiv Eikon. The VLCC is expected to discharge in mid-October.
Another VLCC carrying U.S. crude, the Kirkuk, changed its destination from China’s Shandong port to India’s Sikka on Aug. 31, one day before tariffs kicked in, according to Refinitiv shipping data.
A shipping source said the Kirkuk is carrying WTI Midland crude for Reliance Industries Ltd (RELI.NS) and is expected to arrive at Sikka by the end of September or early October.
The seller of the cargo is not immediately known.
Indian refiner Bharat Petroleum Corp’s (BPCL.NS) head of refineries R. Ramachandran told Reuters that a Chinese trader has offered a cargo of U.S. oil to the refiner after Beijing’s latest tariff hike. But he declined to identify the seller.
Reporting by Shu Zhang in SINGAPORE, Nidhi Verma in NEW DELHI and Jane Chung in SEOUL; Writing by Florence Tan; Editing by Tom Hogue
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