China's Sinopec inks deal to buy oil priced off Shanghai futures

Sinopec’s trading arm, Unipec Asia has inked a deal with a western oil firm to buy Middle East crude priced against the newly-launched Shanghai crude futures contract, Reuters reported on Monday, citing an unnamed senior company official.

No further details were mentioned about the seller or the purchase volume and value.

The Hong Kong-based company will purchase the crude delivered to China for one year starting from September.

Shell International Eastern Trading Co, the trading arm of Royal Dutch Shell, was said to be the seller, but Shell declined to comment.

The deal will help enhance the viability of China's first crude futures contract, as the country hopes to create a benchmark to rival global price markers Brent and West Texas Intermediate (WTI).

"We believe the (Shanghai) contract will have a big impact on oil pricing in Asia," the Unipec official said.

A Shanghai trading desk was launched by the refiner to trade INE crude.

More than 15 million barrels per day of Middle East and Russian crude exported to Asia are currently priced using the Dubai and Oman benchmarks assessed by S&P Global Platts and the Oman crude futures on the Dubai Mercantile Exchange (DME).

The liquidity for Shanghai crude futures will surpass that of DME, and provide an alternative price marker for oil deliveries in China, the official added.