China takes advantage of the European “price ceiling” on Russian oil
Independent Chinese refiners have seen their refining margins jump in recent weeks as they are able to negotiate higher discounts for commonly imported Russian crude, even if they buy it above the price ceiling set by the G7, they told Reuters on Tuesday. commercial and industrial sources.
The flow of cheaper Russian crude to China has pushed up the refining margins of independent refiners, the so-called teapots, to more than $115 (800 Chinese yuan) per ton last week, from less than $86 (600 yuan) all year round. December, according to a China-based oil analyst who spoke to Reuters.
Many independent Chinese refiners based in Shandong province have continued to buy Russian crude, ignoring the price cap imposed by Western countries. The price cap on Russian crude imposed by the EU, the G7 and Australia went into effect on December 5, but China has not joined the so-called Price Cap Coalition, which bans Russian crude shipping services unless that is not sold at or below $60 a barrel.
ESPO, the Russian Far East crude favored by Chinese independent refiners, is selling above the price limit and trade sources estimate it at around $65-68 a barrel, FOB.
Although above the price cap, the ESPO price traded by Chinese refiners is still at a deep discount to ICE Brent futures for the cargo delivery month, currently February and March.
Even though China has not joined the Price Cap Coalition, the fact that a price cap now exists gives the world's largest importer of crude oil, as well as other buyers of Russian crude such as India, greater bargaining power to negotiate steep discounts for Russian crude also outside the price cap mechanism, analysts say.
Trade with ESPO above the price cap suggests that, for now, Russia has the tankers and insurance companies to provide cover and transportation for ESPO crude, which can reach China from the Russian Far East in less than a week.
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The article China takes advantage of the European "price ceiling" on Russian oil comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-cina-approfitta-del-tetto-al-prezzo-europeo-sul-petrolio-russo/ on Tue, 20 Dec 2022 15:21:51 +0000.