A new Reuters report which has examined data from ship-trackers and traders, found that this year China has managed to save billions of dollars on record levels of crude oil imports from countries which were under Western sanctions.
The outlet reported that China has taken deliveries of oil from Russia, Iran, and Venezuela, at discounts which it is estimated have saved the Asian superpower about $10 billion, at a time when crude prices on the global market have surged due to tightening supplies.
Reuters noted that “An unintended consequence of sanctions imposed by the United States and others on Russia, Iran and Venezuela has been to lower the oil import costs for refiners in top economic rival China, which often criticizes such ‘unilateral” penalties.
The outlet reported that according to ship-tracking data from Kpler and Vortexa, between January and September of this year, China has imported a record level volume of 2.765 million barrels per day (bpd) from the three primary oil exporters which are presently under Western sanctions.
Kang Wu, global head of demand research at S&P Global Commodity Insights noted, that the quantities of oil purchased would have cost China almost $10 billion more, had it been bought from non-sanctioned oil producers. Although the savings are a fraction of the total bill China pays for its oil imports, the savings are vitally important for the independent refiners, also called “teapots” which are, “opportunistic buyers and actively look for bargains.”
In the first nine months of the year, oil deliveries from Russia, Iran, and Venezuela have been crowding out imports from the Middle East, West Africa, and South America, making up a quarter of the imports China has purchased over that period. That marks an increase from the about 21% seen last year, and the 12% share it made up in 2020, according to the data.
The single biggest supplier of oil to China has been Russia, which has beaten out the world’s biggest crude exporter, Saudi Arabia, even as oil prices globally have climbed, and the discount Russia has offered over global benchmarks has continued to diminish with time.
Chinese customs data has shown that deliveries of Russian crude to China increase by 25% over the first eight months of 2023, compared to one year prior, adding up to 71.2 million tons. The increase was due to the discounts Russia offered to encourage sales as it sought to forge new trade relationships and destinations for its crude shipments once Western sanctions disrupted its old trade relationships.
