Why is China importing less oil from Russia?
According to Bloomberg, the expected shift of Russian crude flows to Asia is significant in anticipation of the December 5th oil embargo.
Before the Russian invasion of Ukraine, less than 40% of Russian crude was directed to the precious Asian market. Today, however, nearly 70% of Russia's oil is destined for Asia, with China and India topping the list of buyers.
Total crude exported by Russia fell to a three-week low of 2.9 million bpd in the week ending Nov. 11. But Russian crude bound for China, India and Turkey – along with cargoes of Russian crude that have yet to announce a destination – surged to a new record 2.39 million bpd for the week.
But Chinese refiners appear to be slowing Russian crude purchases for December cargoes, according to Reuters , and China is paying lower premiums as EU sanctions approach which take effect Dec. 5, along with the price specter. cap of the G7 which should also enter into force on that date.
According to Reuters, this slowdown in Russian crude flows is causing oil to build up in Russian deposits, leading to pressure on prices, since China and India have become such a large part of Russia's exports since the invasion. .
In fact, traders told Reuters that only about five to seven December loads of EPSO Blend were sold to Chinese users, a stark contrast to the usual 30 per month.
Chinese refiners paid about $1.70-1.90 a barrel more for ICE Brent on a DES basis, compared to $2.70 two weeks ago, even as operators told Reuters that “everything is under track now,” making it difficult to get the details of these deals.
Why this slowdown? Buyers are wary and want to sell what the effect of new sanctions on oil services imposed by the EU and the West, especially related to services such as freight and insurance. This means that, at least for now, there is no rush for discounted Russian oil in search of new buyers.
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The article Why is China importing less oil from Russia? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/perche-la-cina-sta-importando-meno-petrolio-dalla-russia/ on Tue, 15 Nov 2022 10:00:21 +0000.