Russia has reclaimed its position as China’s biggest oil supplier, overtaking Saudi Arabia in May as Beijing cashed in on discounted Russian energy.
Last month, Chinese imports of Russian oil surged by 55% from a year earlier, according to data from the Chinese government.
The increase meant Russia surpassed Saudi Arabia as China’s biggest source market for oil, recovering the top spot after a gap of 19 months.
China imported around 8.42 million tons of crude oil from Russia in May, the data showed—the equivalent of 1.98 million barrels per day, according to Reuters.
Meanwhile, China’s purchases of Russian liquefied natural gas rose 54% from the previous May.
Total imports from Russia increased 80% year-on-year to almost $10.3 billion.
China and Russia have maintained strong political and economic ties since the latter’s invasion of Ukraine, with the country’s two presidents holding a “warm and friendly” phone call last week in which they committed to deepening the relationship between their two countries.
Russian oil discounted
Western sanctions on Russian energy in the wake of the invasion of Ukraine have forced Moscow to slash the price of its energy exports as it searches further afield for buyers to plug the gap set to be left by Europe.
In May, Reuters reported that the spot price of Russian oil was around $29 less per barrel than it was before the invasion of Ukraine and well below the price of oil from the Middle East, Africa, the U.S. and Europe.
The price of Urals—Russia’s main export blend—averaged $73.24 a barrel between mid-April and mid-May, according to Bloomberg, making it almost a third cheaper than Brent crude futures over the same period.
Urals is usually traded at a discount to Brent crude, but the gap between the price of the two products is reported to have widened drastically since Russia invaded Ukraine in late February.
According to data from Finnish fuel refiner Neste, Urals was priced, on average, at $33.63 less than Brent over the five days to Monday.
A year earlier, the price difference was around $1.50, according to Neste.
Brent crude futures were trading at more than $112 per barrel on Monday. In February, oil prices surged above $100 per barrel for the first time since 2014 on the back of Russia’s invasion of Ukraine.
Not just China
Heavily discounted prices have seen buyers other than China snap up Russian oil, potentially blunting the efficacy of Western sanctions.
India, for example, has increased its share of Russia’s total crude exports from 1% to 18% since the invasion, according to the BBC.
Last week, a report from the Centre For Research on Energy and Clean Air found that Russian revenues from oil and gas exports reached almost $100 billion during the first 100 days of the war in Ukraine, and warned that there were potential loopholes in efforts to restrict purchases of Russian energy.
The report said that India, the Middle East, France and Belgium were “dipping into discounted Russian fuels.”
