SINGAPORE: China's state-owned Sinopec, the world's largest refiner, has significantly increased purchases of Russian crude as it replaces Middle Eastern supplies disrupted by the Iran war, according to trade sources and ship-tracking data.

The shift has allowed Sinopec to maintain relatively stable refinery operations by sourcing cheaper Russian oil while benefiting from strong export margins, despite China's March fuel export restrictions aimed at safeguarding domestic supply amid war-related disruptions.

According to several trade sources, Sinopec purchased between 30 and 40 cargoes of Russia's Eastern Siberia-Pacific Ocean (ESPO) crude for delivery between July and September, equivalent to about 241,000 to 320,000 barrels per day. The volumes represent roughly 5 percent to 6 percent of the company's 5.2 million barrels per day of refining capacity.

A Sinopec representative said the company does not publicly discuss operational matters.

"Sinopec's crude demand appears to have bottomed out following the easing of fuel export restrictions, but the recovery remains selective," said Emma Li, lead China analyst at Vortexa Analytics.

China, the world's largest crude importer, sharply reduced overall oil imports after the war in Iran began, with June purchases falling 41 percent from a year earlier. However, Beijing has eased fuel export restrictions for July and August.

"Rather than broad-based import growth, demand is shifting towards barrels with greater delivery certainty and lower freight costs - primarily onshore inventories and short-haul Russian Far East cargoes," Li told Reuters.

Vortexa tracking data showed Sinopec imported about 7.4 million barrels of ESPO crude in July, mainly through the port of Rizhao in Shandong province. Li and four traders also said the refiner purchased at least 10 cargoes each for August and September deliveries.

China and India have remained the largest buyers of Russian oil since the war in Ukraine began. Although China's major state refiners suspended purchases from sanctioned Russian producers in October, Sinopec resumed buying Russian crude in March and April following a temporary U.S. waiver and expanded purchases after the waiver expired as the Iran war tightened global supplies.

According to four people familiar with the transactions, Sinopec's recent ESPO purchases were made through intermediaries and did not involve sanctioned entities as counterparties. The company has also continued paying for Russian crude in Chinese yuan.

Before the Iran war, nearly half of Sinopec's crude imports came from the Middle East, with Saudi Arabia among its largest suppliers. Trade sources said Sinopec bought no Saudi crude for June and July and only 2 million barrels for August, sharply below the roughly 20 million barrels it imported in both March and April and well below pre-war averages.

Traders said September-loading ESPO cargoes were priced at a US$1-$2 per barrel discount to Brent, making them about $10 per barrel cheaper than competing grades from the Middle East and Brazil.