The month of May saw China’s imports of crude oil from Russia surge significantly, beating Saudi Arabia as the largest source of oil to the country.
Despite western sanctions against Russia for its invasion of Ukraine, Moscow was able to slash its prices and find buyers for its oil, putting into question whether sanctions are enough to stop the violence.
Black gold for China
Beijing’s imports of Russian oil have soared 55 percent year-over-year.
Despite COVID-19, the subsequent lockdowns and a stricken economy, Chinese state-run oil companies like Sinopec and Zenhua Oil have turned to purchasing cheap Russian oil on top of supply from Iran and Venezuela, Reuters reported.
While China continues to deny support for the Ukraine war, the Chinese Communist Party (CCP) has vowed to cooperate with Moscow, in the face of opposition from the West.
The sanctions inflicted on Russia have prompted a decline in crude sales by 554,000 barrels per day (bpd) to Europe from March to May. European nations have agreed to reduce their reliance on Russian crude oil. The European Union previously sourced up to 61 percent of its oil from Russia.
Despite sanctions, Moscow has continued to pump oil from its Siberia Pacific Ocean pipeline, churning out nearly 8.42 million tonnes of oil or 1.98 million bpd, data from the Chinese General Administration of Customs suggests.
In addition to crude oil, the data also showed that China’s imports of Russian liquefied natural gas (LNG), rose 56 percent compared to last year.
To sell their oil, Russia has had to slash its prices to avoid the risk of repercussions from the sanctions. Energy prices have also skyrocketed, driving Russia’s oil revenue up to $1.7 billion more than last month, according to the International Energy Agency.
This staggering amount has pushed Saudi Arabia — initially the top supplier of crude oil to China — down to second place behind Russia, with May volumes up nine percent year-on-year registering 7.82 million tonnes (1.84 million bpd); a decrease from 2.17 million bpd in April.
- Washington Rattles Its Saber at India After Russian Oil Purchases
- Trudeau’s Ban on Russian Oil Imports Will Have Little Effect
- Sanctions Hurt Europe and Make Russia Rich as Gas Prices Soar
Other than Russia, China has purchased oil from Iran, which has to be transported through other countries to avoid consequences from sanctions. Roughly seven percent of Iranian exports go to China.
Venezuela, a country largely reliant on oil, saw zero imports, due to state oil firms backing away since 2019 to prevent being struck by secondary U.S. sanctions.
Oil imports from Malaysia, serving as both a producer and transport hub for foreign oil, amounted to 2.2 million tonnes, which is more than double the amount a year earlier.
Brazilian imports, however, dropped 19 percent with 2.2 million tonnes from the previous year, with “cheaper competition” from Iranian and Russian oil barrels posing a challenge to the Latin American nation.
Other than China, India has also been purchasing Russia’s cheaper oil, obtaining more than 760,000 bpd where they previously bought virtually none, data from market research firm Kpler showed.
While South Korea and Japan have cut their reliance on Russian oil, the amounts still pale in comparison to what China and India are buying. J.P. Morgan commodities experts predict that China could continue to buy millions of barrels of crude oil a day as it recovers from the pandemic.
“Asia has saved Russian crude production,” Viktor Katona, analyst at Kpler, said. “Russia, instead of falling further, is almost close to its prepandemic levels.”
Ukraine’s Trade Representative, Taras Kachka, warned those who buy Russia’s crude oil that Moscow would “weaponize anything” and manipulate them.