MAY 20, 2022, 22:19 IST
Business Insider US
Brian Evans
- China is ramping up its purchases of Russian oil and picking up the slack of Western buyers.
- The world’s top oil importer is nearing 1.1 million barrels per day of Russian crude brought by sea, Reuters said.
- China previously recorded imports of 750,000 barrels per day in the first quarter in 2022.
China is ramping up purchases of discounted Russian oil, filling the void left by Western buyers that have shunned the Kremlin’s crude.
After initially cutting back when Russia invaded Ukraine in late February, China is projected to import 1.1 million barrels per day of Russian oil brought by sea, according to data from Vortexa Analytics that was cited by Reuters. That’s up about 47% from 750,000 bpd in the first quarter.
Beijing is snatching up Russian crude at steep discounts, according to Reuters, with spot differentials ringing in close to $29 less per barrel compared to before Russia’s war on Ukraine. China is purchasing the crude through Unipec, the trading body of Asia’s premier refinery Sinopec.
China also receives about 800,000 barrels of Russian oil via pipeline from pre-existing government frameworks, Reuters added. That brings China’s consumption of Russian oil to nearly 2 million barrels per day in May, accounting for 15% of its overall demand.
Western sanctions have yet to fully deter global customers from buying Russian oil. While the European Union has publicly condemned the Kremlin for its war in Ukraine, it hasn’t imposed an oil embargo yet. Meanwhile, China and India have stepped up purchases of Russian oil.
Last week, the International Energy Agency said Russian oil export revenue is up 50% since the start of 2022 with the Kremlin generating close to $20 billion per month in sales.
Export volume has rebounded to levels seen before Russia invaded Ukraine. In April, Russian oil exports climbed by 620,000 barrels per day from the prior month to 8.1 million, back to their January and February average, the IEA said.
Russian oil production is also rebounding. Alexander Novak, the Kremlin’s top energy official and deputy prime minister, said output increased by 200,000-300,000 barrels per day in May after declining by 1 million barrels per day in April.
“We expect further recovery in June,” Novak said Thursday at an event in Moscow, according to Bloomberg.