SINGAPORE, March 26 (Reuters) - Unipec, the trading arm of Asia’s largest refiner Sinopec, has inked a deal with a western oil major to buy Middle East crude priced against the newly-launched Shanghai crude futures contract < 0#ISC:>, a senior company official said on Monday.
Hong Kong-based Unipec Asia will buy the crude delivered to China for one year starting from September, said the source who declined to be named due to company policy. He declined to comment on the counterparty and the purchase volume.
Shell International Eastern Trading Co, the trading arm of Royal Dutch Shell, was heard to be the seller, said multiple sources that participate in the market, although a Shell spokeswoman declined to comment.
The deal would help cement the viability of China’s first crude futures contract as the world’s largest oil importer 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.
“The timing is good as China has opened up the market for independent refiners to import crude,” the source said. “We hope it will be successful.”
The high trading volumes for the Shanghai crude contract on its first day, which challenged those of international benchmark Brent during Asian hours, surprised market participants as western commodity merchants and Chinese oil firms both traded actively.
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 price reporting agency 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,” he said, providing an alternative price marker for oil deliveries in China.
The DME declined to comment.
Reporting by Florence Tan Editing by Henning Gloystein and Christian Schmollinger