China’s largest oil supplier, Russia, has been overtaken by Saudi Arabia. Beijing is trying to profit from the crisis by buying cheaper supplies.
China’s crude imports from Russia rose 55 per cent to approximately two million barrels per hour compared to one year ago after Beijing increased its purchases at a steep discount.
Beijing data revealed that China purchased $7.5 billion (£6.1bn), of Russian energy products. This is twice the amount it bought a year earlier.
China’s oil giants are attempting to buy Russian oil at a bargain price as the West tries to distance itself from the Kremlin after the invasion of Ukraine. After the US, Europe, and the UK agreed to oil embargoes that would severely impact a key source revenue source for the Kremlin, Vladimir Putin wants to diversify his exports.
While crude oil prices worldwide have shot up well over $100 per barrel, Russian oil is selling at huge discounts of up to 30%
Increased purchases by Russia’s ally could undermine Western sanctions aimed at cutting off Moscow’s revenues.
Joe Biden, the US president, stated that oil embargoes would be applied to Russia’s main artery. However, China’s purchases show that its energy giants are adapting even though Russia is in a deep recession.
As households are squeezed by rising energy costs, higher energy prices could also lead to Western economies going into recession.
Last week, Putin stated that sanctions are “more damaging” than the countries that impose them. Economists predict that Russia will experience a two-year recession.
Analysts predict that oil prices will remain high as Chinese demand rebounds from the lockdowns.
UBS chief investment officer Mark Haefele stated that crude oil demand from China, the largest importer in the world, will slowly recover once mobility restrictions are relaxed.
“Crude supplies must remain tight. A promise by OPEC+ that it will increase production is unlikely to result in a significant rise in global supplies. The group is already struggling with its output targets.
