China’s state-run Sinopec and PetroChina, the country’s top two refiners, are resuming purchases of discounted Russian crude oil after a brief pause in late 2022, just before the European Union ban on Russian oil started. Russian Urals crude, which historically is bought by European consumers, is now heading to China and India at significantly lower prices the EU embrago on Russian crude in response to Moscow’s invasion of Ukraine. China’s state refiners received permission from the authorities to buy Russian crude at large discounts, thus reducing costs and boosting refining margins. The permission comes just as demand for transportation fuel is rebounding in China, the world’s second biggest oil consumer, following an end to government’s zero-Covid policy.

PetroChina will receive around 1.5 million barrels of Urals crude later this month to its 200,000 barrels-per-day refinery in Guangxi province. The refinery’s latest imports of Urals crude were 730,000 barrels each in October and November.

Asia’s top refiner Sinopec is also set to resume imports although it is not immediately clear the volume it has bought and where it will be delivered.

Prices of Urals continue to be well below the price cap and the cheap crude comes to refineries at a time when China’s demand is set to pick up.

March-loading Urals crude is traded at a discount of about $13 against ICE Brent on a delivered ex-ship basis versus a discount of $7 two months ago.

Unipec, Sinopec’s trading arm, was one of the major buyers of Russian crude oil last year when western countries shunned trade with Russia in the wake of its invasion of Ukraine. Four Sinopec refineries have previously received Urals crude. The company last received 730,000 barrels of Urals shipment in November.

Both PetroChina and Unipec are allowed to buy only Russian crude delivered to China from trading companies that handle payments to Russian producers, arrange for shipping and insurance.

They do not use western ships or insurance permitted in the Russian price cap mechanism devised by the Group of Seven nations, the European Union, and Australia aimed at curbing Russia from funding its invasion of Ukraine.

Under the mechanism, companies involved in the deals have to show U.S. officials documents proving that the price of Russian crude is below $60 a barrel. By going through middlemen, it shields Chinese majors from U.S. scrutiny of their trades, the sources said.

China’s imports of Urals plunged to only 1.45 million barrels in December from a peak of 9.67 million barrels in August. But it rebounded in January and is expected to rise more in the coming months.