Western-imposed sanctions forced Russia to offer discounts on its crude oil last year and China took full advantage, with the Kremlin replacing Saudi Arabia as the communist nation’s top supplier, according to new data.
Defying the West's attempts to cut Russia’s finances, China received a record 107.02 million metric tons of crude oil from Russia last year, equivalent to 2.14 million barrels per day (bpd), the Chinese customs data showed, far more than other major oil exporters such as Saudi Arabia and Iraq. The volume represents a 24.1% increase compared to 2022.
Imports from Saudi Arabia, previously China's largest supplier, fell 1.8% to 85.96 million tons, as the Middle East oil giant lost market share to cheaper Russian crude.
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Russia’s invasion of Ukraine in 2022 prompted Western nations to slap embargos on its crude oil and other oil products to drain its war chest, but Chinese refiners have been using intermediary traders to handle the shipping and insurance of Russian crude to avoid violating the sanctions, according to Reuters.
Last month Russia said it managed to get around the sanctions by diverting most of its oil exports from Europe to India and China. Russian crude oil exports to India surged to an all-time high last year, with 2023 being the first time India imported nearly equal quantities of oil from the Organization of Petroleum Exporting Countries (OPEC) members as it did from non-members.
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Increased demand from Chinese and Indian refiners for discounted oil boosted the price of Russian ESPO crude through 2023, pushing past the Group of Seven's (G7) $60-a-barrel price cap imposed in December 2022. Shipments for December delivery were priced at a discount of around 50 cents to 20 cents per barrel to the ICE Brent benchmark, versus a $1 premium for October delivery cargoes and a discount of $8.50 for shipments delivered in March, according to Reuters trading sources.
Brent Crude futures stood at around $78.50 on Friday while the price of ESPO was $75.43, according to OilPrice.com.
Kevin Book, the Managing Director of Clearview Energy Partners, an independent research firm based in Washington D.C. told Fox News in November that "China loves a bargain."
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"They are the biggest oil importing country in the world and when they can save a barrel, they're probably going to save a barrel, Book said. "When they can save money on a barrel, they're probably going to do that too."
Iraq is China’s third-biggest importer, having shipped about 59.26 million tons in 2023, a 1.3% increase.
The U.S. stands in tenth place with shipments to China from the U.S. last year surging to 81.1% despite geopolitical tensions between Beijing and Washington as U.S. crude production increased.
Reuters contributed to this report.
