China’s imports from Russia are on track for all-time high of over 2 million barrels per day in February as India is withdrawing from Russian spot purchases and supply is now heavily discounted for Chinese independent refiners.
China is set to import 2.07-2.08 million barrels per day (bpd) of oil from Russia this month, according to data from Vortexa and Kpler cited by Reuters.
The figure would be a new record high and significantly higher than the 1.7 million bpd estimated imports of Russian oil to China in January.
The U.S. sanctions on Russian producers Rosneft and Lukoil, and the U.S. pressure on India to cut back, or as the White House wants, to halt, imports of Russian oil, have dragged discounts for Russian crudes to the widest in years.
The flagship Russian grade Urals, which was previously flowing to India, is now priced at between $9 and $11 a barrel below benchmark ICE Brent for January/February deliveries to China, traders tell Reuters.
Discounts widened further early this month after the U.S. and India reached a trade deal, in which lower U.S. tariffs for Indian goods are dependent upon India slashing its purchases of Russian oil.
While India is looking to appease the U.S. Administration with lower spot purchases and state refiners suspend activity in Russian barrels, Chinese refiners have stepped in to gorge on the cheap crude.
That’s especially true for the so-called teapots, the independent refiners in the Shandong province, which have not shied away from any sanctioned supplies in recent years, including cargoes from, Iran, Russia, or Maduro’s Venezuela.
With Venezuelan sales now controlled by the United States and done via the top international traders Vitol and Trafigura, discounts of Venezuelan crude have narrowed relative to Brent. But the discounts have widened for Russia’s crude, which China’s independent refiners aren’t turning away.
