China’s Biggest Oil Supplier is now Russia, Russia has overtaken Saudi Arabia as China’s largest oil supplier, selling discounted crude to Beijing amid sanctions related to the Ukraine war.
Imports of Russian oil increased by 55 percent year on year to a record level in May, surpassing Saudi Arabia as China’s largest supplier.
Despite Covid limits and a faltering economy, China has increased its purchases of Russian oil.
China and Russia declared their friendship had “no bounds” in February.
And Chinese firms, like state-owned Sinopec and state-owned Zhenhua Oil, have expanded their purchases of Russian crude in recent months after being offered steep discounts as purchasers in Europe and the United States avoided Russian energy due to sanctions related to Russia’s war in Ukraine.
According to Chinese General Administration of Customs figures, imports into China totaled over 8.42 million tonnes last month, including supplies pumped through the East Siberia Pacific Ocean pipeline and cargoes by sea.
This knocked Saudi Arabia, which was formerly China’s largest crude oil supplier, into second place with 7.82 million tonnes.
The United States and the United Kingdom said in March that they would boycott Russian oil, while the European Union has been striving to reduce its reliance on Russian gas as the West intensifies its economic response to Ukraine’s invasion.
With gas prices so high, it’s not just drivers that fill up when they see a good bargain. Not alone has China taken advantage of Russia’s reductions as the latter strives to woo new customers; India has also increased purchasing.
This, together with rising petroleum prices, aided Russia’s income growth in the immediate aftermath of its invasion of Ukraine.
And for every ten barrels of Russian oil China used to buy before the war, the UK and US bought one. Moscow may not have to work too hard to fill at least some of the void as those two countries divert their business elsewhere.
However, Russia’s oil earnings have already begun to decline, and this trend will continue as other European countries look for new energy sources.
Meanwhile, Ukraine’s Trade Representative has issued a strong warning to anyone who chose to increase their purchases from Russia. Taras Kachka warned the BBC that Moscow would “weaponize anything” to influence and hold countries to ransom. However, as they seek a (relative) deal during a difficult period, that warning may be ignored by individuals travelling to Russia.
At the time, US Vice President Joe Biden stated that the measure was aimed at “the primary artery of Russia’s economy.”
Energy exports are an important source of money for Russia, but the change is expected to have an impact on Western customers.
According to a report released last week by the Centre for Research on Energy and Clean Air, Russia earned about $100 billion (£82 billion) in revenue from fossil fuel exports in the first 100 days of the country’s invasion of Ukraine, despite a drop in exports in May.
The European Union accounted for 61% of all imports, valued at around $59 billion.
Overall, Russian oil and gas exports are declining, and Moscow’s earnings from energy sales have fallen from a high of well over $1 billion per day in March.
However, income exceeded the cost of the Ukraine war during the first 100 days, with the CREA calculating that Russia is spending $876 million per day on the invasion.
According to the numbers released on Monday, China received 260,000 tonnes of Iranian crude oil last month, the third shipment of Iranian oil since December.
Despite US sanctions, China has continued to purchase Iranian oil.
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