Due to the war in the Middle East: China has resumed purchasing Russian oil
17 March 16:21
Chinese state-owned energy giants Sinopec and PetroChina are resuming purchases of Russian crude oil after a four-month hiatus.
This was reported by Reuters, according to [Komersant].
The resumption of trade was made possible by the introduction of a 30-day suspension of U.S. sanctions, which began on March 12.
Demand for Russian oil from state-owned traders has risen after the U.S. and Israel’s war against Iran triggered a rise in prices for alternative fuel grades. Currently, Russian oil remains significantly cheaper than competing offers from Brazil or West Africa.
In particular, Brazilian Tupi crude is priced at a premium of up to $15 per barrel, while Russian ESPO crude is offered at a lower premium.
It is noted that Chinese state-owned corporations are considering purchasing raw materials not only directly but also through domestic intermediaries. In particular, major players may buy up stocks from independent oil refineries, known as “teapots.”
Some of these private enterprises are willing to resell the oil, as current market conditions make such a transaction more profitable than direct processing at refineries.
Impact of International Sanctions
China’s state sector halted purchases at the end of October last year due to Washington’s sanctions against Russia’s largest suppliers.
Currently, Chinese oil traders are carefully assessing payment and logistics options within the current permitted timeframe.
This allows state-owned companies to ensure the country’s energy security amid instability in maritime routes through the Strait of Hormuz.
