According to shipping statistics and oil dealers who talked to Reuters, China is quietly stepping up imports of Russian oil at discount rates, filling the void left by Western purchasers pulling out after Russia’s invasion of Ukraine in February.
The move comes a month after the world’s largest oil importer cut back on Russian shipments for fear of seeming to openly support Moscow and potentially exposing its state-owned oil companies to sanctions.
According to Vortexa Analytics, China’s seaborne Russian oil imports will hit a near-record 1.1 million barrels per day (BPD) in May, up from 750,000 BPD in the first quarter and 800,000 BPD in 2021.
According to shipping statistics, a shipbroker report reviewed by Reuters, and five traders, Unipec, the trading arm of Asia’s top refiner Sinopec Corp (600028.SS), is leading the acquisitions, along with Zhenhua Oil, a unit of China’s defense group Norinco. According to the traders, Livna Shipping Ltd, a Hong Kong-based company, has suddenly emerged as a key carrier of Russian oil into China.
Sinopec has remained silent. Requests for comment from Zhenhua and Livna were not returned.
The companies are filling the void left by western purchasers following Russia’s invasion of Ukraine, which the country refers to as a “special military operation.”
Shortly after the invasion, the United States, the United Kingdom, and a few other major oil customers prohibited Russian oil imports. A new wave of sanctions, including a restriction on Russian oil purchases, is being finalized by the European Union. For fear of falling foul of sanctions or attracting bad attention, many European refiners have already stopped buying from Russia.
Vitol and Trafigura, two of the world’s largest commodity dealers, have stopped buying from Rosneft, Russia’s largest oil producer, ahead of an EU rule that takes effect on May 15 and prohibits purchases unless they are “strictly required” to meet the EU’s energy demands.
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