China is ramping up purchases of oil from Russia at bargain basement prices, according to
shipping data.
The move by the world's biggest oil importer comes a month after it had initially cut back on
Russian supplies, for fear of appearing to openly support Moscow’s invasion of Ukraine and
potentially expose its state oil companies to sanctions.
But now, China's Russian oil imports will jump to a near-record 1.1 million barrels per day (bpd)
in May, up from 750,000 bpd in the first quarter of this year and 800,000 bpd in 2021, according
to industry estimates.
Unipec, the trading arm of Asia's top refiner Sinopec s leading the purchases, along with
Zhenhua Oil, a unit of China's defense conglomerate Norinco, according to shipping data. Livna
Shipping, a Hong Kong-registered firm, has also recently emerged as a major shipper of
Russian oil into China.
The Chinese firms are filling the hole left by western buyers after Russia's invasion of Ukraine
this past February.
The U.S., Britain and other key oil buyers banned imports of Russian oil shortly after the
invasion. The European Union is finalizing a further round of sanctions, including a ban on
Russian oil purchases.
Many European refiners have already stopped buying from Russia for fear of running afoul of
sanctions or attracting negative publicity.
The low price of Russia's oil – spot differentials are about $29 U.S. less per barrel compared
with before the invasion - is a boon for China's refiners as they face shrinking margins in a
slowing economy.
China separately receives some 800,000 bpd of Russian oil via pipelines under government
contracts. That would bring May imports to nearly two million bpd, 15% of China's overall
demand. For Russia, the oil sales to China are helping to cushion the blow to its economy from
sanctions.
