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Russia Becomes China’s No. 1 Oil Supplier Despite Ukraine War Sanctions | Oil

China’s crude oil imports from Russia soared 55% from a year earlier to a record high in May, overtaking Saudi Arabia as the top supplier as refiners took advantage of cut-price supplies as part of the sanctions imposed on Moscow for its invasion of Ukraine.

Russian oil imports, including supplies pumped through the East Siberia Pacific pipeline and sea shipments, totaled nearly 8.42 million tonnes, according to data released Monday by China’s General Administration of Customs.

Shipments are equivalent to nearly 2 million barrels per day (bpd) and up a quarter from 1.59 million bpd in April. China is the largest importer of crude oil in the world.

Chinese companies, including state-owned refining giant Sinopec and state-owned Zhenhua Oil, have increased their purchases of Russian oil, lured by steep discounts after Western oil majors and trading houses pulled out due to the penalties.

Discounts of up to 30% have helped Russia keep its coffers full despite Western sanctions aimed at crippling the country’s economy. The Kremlin raked in around $20bn (£16.6bn) from oil exports in May.

Soaring oil prices also played a significant role, with prices up more than 60% in the past 12 months to around $112 a barrel for international benchmark crude on Monday.

China’s purchases are also part of Beijing’s cautious stance on the Ukraine conflict, which has seen President Xi Jinping offer strong implicit support to his authoritarian Kremlin ally Vladimir Putin.

While Beijing initially avoided commenting on the war, it criticized Western sanctions against Russia as “financial terrorism” and “economic militarization”, and also attacked arms sales to Kyiv by foreign countries such as the United States and the United Kingdom.

Saudi Arabia trails as the second-largest supplier, with volumes in May up 9% year-on-year to 7.82 million tonnes, or 1.84 million bpd. That was down from April’s 2.17 million bpd. Russia regained the top spot after a 19-month gap.

Customs data released on Monday also showed that China imported 260,000 tonnes of Iranian crude oil last month, its third shipment of Iranian oil since last December, confirming an earlier Reuters report.

Despite US sanctions on Iran, China has continued to take Iranian oil, usually passed off as supplies from other countries. Import levels are roughly equivalent to 7% of China’s total crude oil imports. China’s overall crude oil imports rose nearly 12% in May from a low a year earlier at 10.8 million bpd, compared to an average of 10.3 million bpd in 2021.

Customs reported no imports from Venezuela. State oil companies have avoided purchases since late 2019 for fear of falling foul of secondary US sanctions.

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Post expires at 8:14am on Thursday June 30th, 2022