Russia appears to be defying western sanctions on its economy especially the oil and gas sector as its crude oil export to China has surged by 55% year-on-year to a record level in May.
This is coming barely three weeks after European Union (EU) leaders agreed to ban over two-thirds of Russian oil imports as part of its tightening economic sanctions on the country due to its invasion of Ukraine.
Russia displaced Saudi Arabia as the top oil supplier to China as refiners cashed in on discounted supplies amid biting sanctions on Moscow.
Russia regains position as top crude oil provider to China
The Chinese imports of Russian oil, including supplies pumped through the East Siberia Pacific Ocean pipeline and seaborne shipments from Russia’s European and Far Eastern ports, hit nearly 8.42 million tonnes, according to data from the Chinese General Administration of Customs.
That’s equivalent to roughly 1.98 million barrels per day (bpd) and up a quarter from 1.59 million bpd in April.
The data, which shows that Russia regained back its top spot as highest suppliers to the world’s biggest crude oil importer after a gap of 19 months, indicates that Moscow is able to find buyers for its oil despite western sanctions, though it has had to slash prices.
And while China’s overall crude oil demand has been negatively impacted by Covid-19 restictions and a slowing economy, leading importers, including refining giant Sinopec and trader Zhenhua Oil, have stepped up, by buying cheaper Russian oil in addition to sanctioned supplies from Iran and Venezuela that allows them to scale back competing supplies from West Africa and Brazil.
Meanwhile, Russia’s position as top crude oil provider to China, puts Saudi Arabia as the second-largest supplier, with May volumes up 9% on year at 7.82 million tonnes, or 1.84 million bpd. This was down from April’s 2.17 million bpd.
Despite U.S. sanctions on Iran, China has kept taking Iranian oil, usually passed off as supplies from other countries, with the import levels roughly equivalent to 7% of China’s total crude oil imports.
What you should know
- The EU leaders, in its compromise deal in May, said that the sanctions is meant to punish Russia for its invasion of Ukraine and cut off huge source of financing for its war machine.
- European officials had said that Russia is cutting off the flow of gas to punish countries that have supported sanctions levied to punish Russia for the invasion.
- Russia had in response to the ban on its oil and gas exports by EU, said the oil ban reflects negatively on the bloc and maintained that Russia will find other importers for its crude oil and gas.
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