Business
Sinochem Launches Middle East Crude Deliveries to Boost Trading

Chinese state-owned company Sinochem has successfully delivered its inaugural cargo of Middle East crude oil, marking a significant step in its efforts to enhance its oil trading operations in Asia. The delivery, which consisted of Oman crude for October loading, was made to commodity trading firm Trafigura during the S&P Global Platts Market on Close process on October 2, 2023. This initiative aims to broaden Sinochem’s trading capabilities and establish a strong presence in a competitive market.
The Market on Close process is instrumental in setting the daily price for the Dubai benchmark, a key reference point for nearly 15 million barrels per day of crude oil exported from the Middle East to Asia. By participating in this pricing mechanism, Sinochem looks to diversify its trading tools and expand its derivatives trading operations, according to multiple sources who provided insights to Reuters.
Strategic Expansion in Oil Trading
Founded in the 1950s, Sinochem has a long history in oil trading and services, primarily focusing on the import, export, and re-export of crude oil and refined products. The company’s recent actions reflect a broader trend among Asian and Middle Eastern energy firms seeking to enhance their trading capabilities. Notably, in March 2023, Abu Dhabi’s national oil company, ADNOC, executed its first trades through the S&P Global Platts pricing process for Dubai crude oil, a rare move for a Middle Eastern producer.
Trading sources report that it is uncommon for Middle Eastern producers to engage in trades that set the pricing for the crude they produce. However, the use of the Oman/Dubai average for pricing crude exported to Asia demonstrates a significant shift in market dynamics. The price trends of both the Dubai and Oman crude benchmarks play a crucial role in the pricing strategies employed by Saudi Aramco, the world’s largest crude oil exporter, as it determines its pricing for oil shipments to Asia.
As Sinochem embarks on this new phase of its oil trading journey, the company aims to leverage the Middle East trading window to strengthen its position in the global energy market. The successful delivery of Oman crude signifies not only a milestone for Sinochem but also highlights the evolving landscape of crude oil trading in the region.
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