As soon as India separated itself from Russian oil. After that China set a big record. China’s Russian oil imports are set to rise for the third consecutive month in February to a new record high after India drastically cut purchases, according to traders and ship tracking data. According to preliminary estimates by Vortexa Analytics, Russian crude oil supplies to China in February are expected to exceed 2 million barrels per day, up from an estimated 1.7 million barrels per day in January. According to provisional data from Kepler, imports stood at 20.83 lakh barrels per day in February, which is more than 17.18 lakh barrels per day in January.
According to Reuters report, due to Western sanctions and American sanctions on Ukraine War, Russian supplies from India reduced and came to the lowest level in 2 years. Due to which China has left India behind as the top customer of oil shipments via sea route to Moscow since November. According to Kpler data, India’s crude oil imports from Russia are expected to decline to 1.159 million barrels per day in February. Due to this, Russian oil prices have fallen by 9 to 11 dollars per barrel compared to ICE Brent, the benchmark for supplies to China in January/February.
This grade is loaded from European ports and usually comes to India due to the shorter distance traveled compared to China. Urals, as well as other oilsands such as Sokol and Varande, have put pressure on regular shipments of Russia’s key ESPO blend exported from the Far East port of Kozmino, near China, setting up a tough competition with crude coming from Iran.
‘Teapots’ are nervous
These Chinese independent refiners, known as ‘teapots’, are the world’s largest consumers of US-sanctioned oil from Russia, Iran and Venezuela. A senior Chinese businessman who regularly trades with Teapots said that Russian supply has become relatively more competitive, given the quality of Russian oil and the processing of Iranian oil, Reuters reported. The trader further said that ESPO Blend for March delivery was priced at $8 to $9 per barrel lower than ICE Brent, while Irani Light of the same quality grade was priced at $10 to $11 lower than ICE Brent.
Russian oil is reliable compared to Iranian oil
Emma Lee, China analyst at Vortexa, said buying by Chinese teapots and traders has slowed since January due to uncertainty over whether the US would launch a military strike on Iran if talks for a nuclear deal fail to produce the results Washington wants. Lee said that for small businesses, Russian oil now looks more reliable because people are worried about the supply of Iranian oil in the event of a military conflict. Li added that part of Russia’s increased purchases of oil came from large independent refiners based out of the small commercial hub of Shandong. Vortexa estimates that supplies of Iranian oil to China – which traders often sell as Malaysian oil to avoid US sanctions – have fallen to 1.03 million barrels per day this month, down from 1.25 million barrels per day in January.