As European countries continue to push for sanctions and blockades on Russian oil, Beijing has seized the opportunity to approach Moscow to reach a good oil deal, according to Bloomberg. Bloomberg said that negotiations between the two sides are being conducted at the government level with little direct involvement of oil companies. Crude oil will be used to supply China's strategic petroleum reserves.
Jane Xie, senior oil analyst at Kpler, told Bloomberg: There is still room for additional reserves and this will be a good opportunity for China to do so, if oil is supplied with attractive trade conditions.
China is also looking to save large sums of money when buying oil at reduced prices. China's refineries have purchased a stable supply of crude oil and according to Bloomberg, Beijing may reserve up to 1 billion barrels.
China is in a good position in the global energy crisis. Cheap Russian crude oil being boycotted by the West is heading to Asia, as a result of which Beijing is more likely to buy. Except for Saudi Arabia, Russia is China's largest oil supplier.
China's Shandong Port International Trading Group, which handles about a quarter of the country's crude oil imports, has secured a rare shipment of Russian oil to arrive this month, Reuters reported on May 11.
Energy consultancy Wood Mackenzie estimates that about 650,000 barrels of Russian crude oil per day previously transported to developed economies such as the EU could be directed to China and India. As China's demand recovers after nearly two months of a COVID-19 freeze, a Russian price cut will be difficult to withstand.
Russia's daily crude oil volumes for China rose 10% from a month earlier to 781,000 barrels in April, the highest level of the year, while the crude oil volumes to India more than doubled to a record 674,000 barrels, according to the S&P.
The US has announced that it will stop importing Russian oil due to the ongoing war between Moscow and Ukraine. The UK, Germany and other European powers are also making similar efforts to limit imports of Russian oil and gas. Meanwhile, less developed European countries, including Italy, are still increasing their purchases of Russian oil and gas to take advantage of sharp price declines.
Representatives of the 27 EU countries meet almost every day to discuss the sixth package of sanctions targeting Russia since the European Commission proposed on May 4.
