China is on pace to buy a record amount of Russian oil this month

  • China’s intake of Russian crude is set to reach a record this month, Kpler data cited by Bloomberg shows.
  • Imports of Sokol crude are on course to jump as Indian buyers back away.
  • The shift is due to tighter enforcement of Western sanctions, that’s diminishing the discount on Russian oil.

Chinese imports of Russian crude are on course to reach record volumes this month, as Beijing takes over diminishing Indian demand. 

1.7 million barrels a day are expected to ship into the country, Bloomberg said, citing Kpler data. China’s intake of Sokol oil — a Russian crude typically sought after by India — is likely to triple from last month, and should hit an all-time high of 379,000 barrels a day.

ESPO flows into China are also expected to rise, reaching their highest level since January 2023.

In one way, surging inflows are evidence of a deeper trade partnership between Beijing and Moscow, one recently touted by Foreign Minister Wang Yi as resembling a “new paradigm of major-country relations.”

But it also stands to showcase the withdrawal of Indian buyers, who have fewer incentives to demand Russian crude amid a tightening of Western sanctions.

Although India became the biggest market for Russian seaborne crude exports last year, it’s become more challenging for Moscow to offer the same sort of discounts on its oil as before. 

That’s as the West has pursued stricter enforcement of its curbs, applying a slew of sanctions on entities that breach have breached its restrictions. 

For instance, by mid-February, 50 tankers have been targeted by such efforts, after shipping Russian crude above the $60 price cap mandated by the Group of Seven.

Russia’s state tanker firm Sovcomflot has notched a number of these penalties, due to which it recently acknowledged operational hardship, Bloomberg said. 

For those buying, this has added to freight costs, while adding to difficulties in finding available tankers. The discount on Russia’s Urals oil mix has meanwhile risen, gaining $4 per barrel in February. 

That same month, Indian imports of Russian crude fell by 420,000 barrels a day. According to Bloomberg, the implied cost of importing Urals crude to the country is now around 20% of the export price when leaving Russia. 

And although China’s buying is surging, its traders also consider Moscow’s asking prices as too high, sources told the outlet. The country is also not immune to secondary sanctions from the US and its allies, and could mean that Chinese banks hesitate from joining the trade.

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