The Rise of Russia as China’s Top Oil Supplier

Russia has claimed the top spot as China’s largest source of oil imports in 2023, overtaking Saudi Arabia, as reported by Offshore Technology. This is despite the Western sanctions affecting oil prices and reducing Russian imports. According to data released by Chinese customs, China, being the largest oil importer globally, purchased a record-breaking 107.2 million tonnes of crude oil from Russia last year, which is around 25% more than in 2022. On the other hand, China’s oil imports from Saudi Arabia dropped by 1.8%, totaling at about 86 million tonnes, making Russia China’s top supplier for the first time since 2018.

The demand from Chinese and Indian refiners for Russian ESPO crude has led to an increase in its price throughout 2023, surpassing the $60 per barrel price cap imposed by the Group of Seven in December 2022. In fact, India is the greatest importer of Russia’s Ural Mountain seaborne oil, accounting for 50% of all Russian exports, with China coming in second. Both China and India imported record-high levels of Russian crude oil in May 2023, benefiting from discounted supply prices, which in turn reduced the demand for oil from other areas such as the Middle East and Africa.

Despite the capped prices on Russian oil set by the Western sanctions, they remained lower than OPEC’s oil prices, since neither of the countries signed up for the sanctions. In addition to oil, Russian pipeline gas and liquefied natural gas imports in China also saw significant growth in 2022, rising by 2.6 and 2.4 times, respectively. China’s imports of these natural resources also jumped by 20% to 68.06 million tonnes.

According to authoritative sources such as Reuters, oil prices have risen on Monday as traders are assessing the impacts of geopolitical tensions in the Middle East and Ukraine on oil supply, as well as the economic pressures on global demand. The price of Brent crude oil increased by $0.22 to $78.78 per barrel, while the front-month US West Texas Intermediate crude futures contract for February delivery was up by $0.31 at $73.72 per barrel in slow trade.

In conclusion, Russia’s ascendance as China’s primary oil supplier, surpassing Saudi Arabia, is a significant development in the global oil trade landscape. The growing demand from China and India, along with discounted prices, has played a key role in this shift. As oil prices continue to be influenced by geopolitical tensions and global economic factors, the dynamics of the oil market are likely to undergo further changes in the future.