Image source: Fox Business
Russian oil imports increased by 55 percent yearly to a new high in May, surpassing Saudi Arabia as China’s largest supplier. Russia has overtaken Saudi Arabia to become the number one supplier of oil to China after selling Beijing discounted petroleum under sanctions over the Ukraine conflict.
Despite demand being reduced by COVID limits and a slowing economy, China has increased its purchases of Russian oil.
China and Russia declared their friendship had “no bounds” in February. And Chinese corporations, like state-owned Sinopec and state-owned Zhenhua Oil, have expanded their purchases of Russian petroleum in recent months after receiving steep discounts as European and American importers eschewed Russian energy due to sanctions related to the country’s war in Ukraine.
Chinese General Administration of Customs reported that imports into China totaled roughly 8.42 million tonnes last month, including supplies pumped through the East Siberia Pacific Ocean pipeline and cargoes by sea.
Saudi Arabia, which was formerly China’s largest crude oil supplier, fell to second place with 7.82 million tonnes.
In March, the United States and the United Kingdom said 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 gasoline prices at an all-time high, it’s not just motorists who are filling up when they see a good bargain. China isn’t the only country that has capitalized on Russia’s reductions in order to acquire new business; India has also increased its purchases.
This, together with rising petroleum prices, aided Russia’s income growth in the immediate aftermath of its invasion of Ukraine.
Furthermore, for every ten barrels of Russian oil, China usually bought one before the war, while the United Kingdom and the United States each bought one. As those two nations take their business elsewhere, Moscow may not have to work as hard to fill at least some of the void.
However, Russia’s oil revenues have 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 chooses to increase their purchases from Russia. Moscow would “weaponize anything,” according to Taras Kachka of the BBC, and utilize their dependence to influence and hold countries to ransom. However, as they seek a (relative) bargain during a difficult time, many traveling to Russia may be hesitant to heed that caution.
US President Joe Biden remarked that the measure was aimed at “the main artery of Russia’s economy.”
Energy exports remains a major source of income for Russia, but the decision is expected to impact Western customers.
Despite a drop in shipments in May, Russia earned about $100 billion (£82 billion) in revenue 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. The European Union accounted for at least 61 percent of total imports, valued at $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, during the first 100 days of the Ukraine war, earnings outpaced the cost of the conflict, with the CREA estimating that Russia was spending roughly $876 million per day on the invasion.
According to Monday’s estimates, China also received 260,000 tonnes of Iranian crude oil last month, the third cargo since December.
Despite US sanctions against Iran, China has continued to acquire Iranian oil.