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Russian oil imports increased from 55% per annum to a new high in May, surpassing Saudi Arabia as China’s top supplier. This is due to sanctions over the war in Ukraine, Russia has become China’s largest oil supplier, selling discounted petroleum to Beijing.
Despite Covid restrictions and a faltering economy, China has increased its purchases of Russian crude.
China and Russia proclaimed in February that their relationship “knows no bounds.” And Chinese companies, such as state-owned Sinopec and state-owned Zhenhua Oil, have increased their purchases of Russian oil in recent months after being offered steep discounts as European and American buyers shunned Russian energy as a result of sanctions related to the country’s conflict in Ukraine.
According to data from China’s General Administration of Customs, imports into China last month were approximately 8.42 million tonnes, which included supplies pumped through the East Siberia Pacific Ocean pipeline and cargoes by sea. With 7.82 million tonnes, Saudi Arabia, which was formerly China’s largest crude oil supplier, fell to second place.
As the West intensifies its economic response to Ukraine’s invasion, the US and UK announced in March that they will boycott Russian oil, while the European Union has been seeking to reduce its reliance on Russian gas.
With gas prices at an all-time high, it’s not just motorists who fill up when they see a good bargain. China has benefited from Russia’s discounts to acquire new business; India has also increased its purchases.
In the early aftermath of its invasion of Ukraine, this, combined with rising petroleum prices, helped Russia increase revenues.
Furthermore, for every ten barrels of Russian crude oil, China would usually buy one before the war, and the UK and US would buy one each. As those two nations take their business elsewhere, Moscow may not have to work as hard to fill at least some of the gap.
However, Russia’s oil revenues have already declined, and this trend will continue as other European countries seek alternative energy sources.
In the meantime, Ukraine’s Trade Representative has issued a strong warning to anyone who chooses to acquire more Russian goods. Moscow would “weaponize anything,” according to Taras Kachka of the BBC, and utilize their reliance to influence and hold countries to ransom. However, since they look for a (relative) bargain during a difficult time, many traveling to Russia may be hesitant to follow that caution.
President Joe Biden of the United States remarked at the time that the measure targeted “Russia’s major artery of economic activity.”
Energy exports are a major source of money for Russia, but the decision is expected to have a negative impact on Western customers.
Despite a drop in shipments in May, Russia gained about $100 billion (£82 billion) from fossil fuel exports in the first 100 days of its invasion of Ukraine, according to research released last week by the Centre for Research on Energy and Clean Air think tank. 61 percent of these imports, totaling $59 billion, came from the European Union.
Overall, Russian oil and gas exports are declining, and Moscow’s earnings from energy sales have fallen from a high of over $1 billion per day in March to well under $1 billion per day. However, during the first 100 days, income exceeded the cost of the Ukraine war, with the CREA calculating that Russia was spending $876 million per day on the invasion.
According to Monday’s estimates, China received 260,000 tonnes of Iranian crude oil last month, making it the third shipment of Iranian oil since December.
Despite US sanctions on Tehran, China has continued to acquire Iranian oil.