Chinese refiners cash in on heavily discounted Russian oil supplies, boosting imports by 55%
China’s crude oil imports from Russia soared by 55% from a year earlier to a record level in May, displacing Saudi Arabia as the top supplier, as refiners cashed in on discounted supplies amid sanctions on Moscow over its invasion of Ukraine.
Imports of Russian oil, including supplies pumped via the east Siberia Pacific pipeline and seaborne shipments, totalled nearly 8.42m tonnes, according to data on Monday from the Chinese general administration of customs.
The shipments are equivalent to almost 2m barrels per day (bpd) and up a quarter from 1.59m bpd in April. China is the world’s biggest crude oil importer.
Ukraine war deepens China’s mistrust of the west
Chinese firms, including state refining giant Sinopec and state-run Zhenhua Oil, have ramped up purchases of Russian oil, enticed by steep discounts after western oil majors and trading houses pulled back due to sanctions.
The discounts of up to 30% have helped Russia to keep its coffers filled despite the sanctions from the west that are designed to cripple the country’s economy. The Kremlin raked in around $20bn (£16.6bn) from oil exports in May.
The soaring price of oil has also played a large part, with prices up by more than 60% in the past 12 months at about $112 a barrel for international benchmark crude on Monday.
The purchases by China are also part of Beijing’s careful positioning over the Ukraine conflict, which has seen the president, Xi Jinping, offer strong implied support to his authoritarian ally in the Kremlin, Vladimir Putin.
While at first Beijing avoided any comment on the war, it has criticized western sanctions on Russia as “financial terrorism” and “economic weaponization”, and has also attacked the sale of arms to Kyiv by outside countries such as the US and the UK.
Saudi Arabia trailed as the second-largest supplier, with May volumes up by 9% on year at 7.82m tonnes, or 1.84m bpd. This was down from April’s 2.17m bpd. Russia took back the top ranking after a gap of 19 months.
Customs data released on Monday also showed China imported 260,000 tonnes of Iranian crude oil last month, its third shipment of Iran oil since last December, confirming an earlier Reuters report.
Despite US sanctions on Iran, China has kept taking Iranian oil, usually passed off as supplies from other countries. The import levels are roughly equivalent to 7% of China’s total crude oil imports. China’s overall crude oil imports rose by nearly 12% in May from a low base a year earlier to 10.8m bpd, versus the 2021 average of 10.3m bpd.
Customs reported zero imports from Venezuela. State oil firms have shunned purchases since late 2019 for fear of falling foul of secondary US sanctions.