Russia becomes China’s largest oil supplier

Russia becomes China's largest oil supplier

According to the latest data released by China’s customs, Russia replaced Saudi Arabia in April and became China’s largest crude oil supplier. In April, Russia exported 7.2 million tons of crude oil to China, equivalent to 1.75 million barrels/day, compared with 1.49 million barrels/day in the same period last year; while Saudi Arabia ’s crude oil exports to China fell to 1.26 million barrels/day in April, which was lower than the previous 1.53 million barrels per day in the same period of the year. According to data from China’s General Administration of Customs, Saudi Arabia was still China’s main crude oil supplier in March, but it fell by 1.6% compared with the same period last year. At the same time, Russian crude oil has greatly increased its supply to China. In March, Russian crude oil exports to China increased to 1.66 million barrels/day, an increase of 31.2% from the same period last year.

According to the statistics of China’s crude oil-importing countries in recent years, the top three countries in China’s total crude oil imports are basically locked in Saudi Arabia, Russia, and Angola. The amount of crude oil imported by Saudi Arabia has ranked first for most of the time, but with the deepening of energy cooperation between China and Russia, the vigorous construction of Sino-Russian oil pipelines and the fact that both parties have begun to use RMB for settlement, Russia has surpassed Saudi Arabia. For four consecutive years, China has maintained its status as the largest source country of crude oil imports. In the face of Russia’s strong competition for the Chinese market, Saudi Arabia’s supply position in China has been challenged. In recent years, it has had to adopt competitive means lower than the Russian sales price to maintain its advantage, but it is still difficult to prevent Russia from increasing its share of China’s crude oil import trade. In the entire Asian market environment, the competition between Saudi Arabia and other oil-producing countries has not been radically intensified. In addition, the market is generally optimistic about the strong demand for Asian countries in the later period of demand, which supports Saudi Arabia’s Asian crude oil prices still have some room for upward adjustment. As Russia replaced Saudi Arabia in April and became China’s largest crude oil supplier, we found that Russian crude oil import prices have also been higher than Saudi Arabia.

In 2020, as the New Coronavirus raged around the world and oil demand fell, in order to seize market share, Saudi Arabia and Russia launched an “oil price war”, exacerbating the collapse of international oil prices, and a large number of oil companies faced a bankruptcy crisis. Superimposing factors such as the large increase in global crude oil storage and monthly change, crude oil futures prices once fell into negative values, setting a precedent in history. Since 2020, the cost of imported crude oil has been declining all the way for several months; domestic oil refineries have started operating at a higher rate to hedge production costs.

However, the cost of crude oil varies greatly among countries. Generally speaking, in terms of extraction, transportation, and taxation, Saudi Arabia is at US $ 9, Russia is at US $ 19, and the US is at US $ 30, so it is the first in the “oil price war” initiated by Russia. The injured became the United States. Of course, China, which should have been more injured, effectively protected oil companies from bankruptcy because of the $ 40 floor price. In order to protect domestic oil companies, the United States began to exert pressure from the Saudi side to allow Saudi Arabia to reduce oil production and increase oil prices. After being threatened, Saudi Arabia began to negotiate with Russia to reduce production plans. After Tsarist Russia stopped the “oil price war” and actively implemented the production cut plan, the international oil price has entered a rapid rebound period since May, which is getting closer and closer to the floor price of $ 40. The most important thing is that after Russia reduced oil production, it began to increase the export price of oil and announced price increases for oil importing countries such as China, India and Japan, which means that the cost of China’s crude oil imports will rise. However, the price of Iranian oil has not risen. Iran recently announced that it will reduce the price of oil exports to Asian customers, which provides a new option for countries such as China, India and Japan. Subsequently, the proportion of crude oil from Russia and Saudi Arabia in China’s crude oil importing countries may decline.

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