Chinese imports of Russian oil will increase by almost a quarter from the same period in 2022.
According to Chinese government data, Russia overtook Saudi Arabia as China’s top oil supplier in the first two months of 2023, as buyers snapped up sanctioned Russian oil at steep discounts.
Arrivals from Russia in January-February totaled 15.68 million tonnes, or 1.94 million barrels per day (bpd), up 23.8 percent from 1.57 million barrels per day in the corresponding period of 2022, data from the General Administration of Customs showed on Monday.
Russia was China’s second largest supplier of crude oil last year, shipping 86.2 million tons.
Saudi crude oil imports totaled 13.92 million metric tons in the two-month period, equivalent to 1.72 million barrels per day, up from 1.81 million barrels per day a year earlier.
Saudi Arabia was China’s main supplier in 2022, selling 87.49 million tons of crude oil in that year, equivalent to 1.75 million barrels per day.
Western sanctions and a price cap on Russian crude oil by sea following Moscow’s invasion of Ukraine have limited the buyer pool for Russian supply, causing it to trade at deep discounts to international benchmarks.
Independent Chinese refiners, many of which are based in Shandong province, were among the main beneficiaries of this shift in pricing power.
Russian ESPO crude arriving in Shandong ports in February was purchased in January at a discount of about $8 to the ICE Brent benchmark, although the price advantage has eroded somewhat with the entry of private Indian refiners into the ESPO market.
With domestic demand for fuel rising after the lifting of COVID-19 restrictions, state-owned companies Sinopec and PetroChina resumed their purchases of Russian Ural-quality shipments in February after a brief pause in late 2022, just before the European Union embargo on Russian oil started. .
Chinese refiners use brokers to handle the shipping and insurance of Russian crude oil to avoid violating Western sanctions.
Customs data also showed that imports from Malaysia were 0.65 million barrels per day over the period, up 144.2 percent from the same period last year. Malaysia is often used as a way station for sanctioned cargoes from Iran and Venezuela.
