Asian nations are letting up on discounted Russian oil exports, with Bloomberg data showing a 13% decline over the past four weeks as Chinese and Indian demand ease, chipping away at Russian oil revenues.
China and India account for purchases of 55% of Russia’s seaborne oil exports; however, Chinese demand over the past four weeks has dropped by 52,000 barrels per day, while Indian demand has eased by 18%, according to Bloomberg.
Reuters also reports that Chinese state-run Sinopec–the biggest refiner in Asia–reduced purchases of discounted Russian ESPO crude oil this month after refusing to outbid Indian buyers.
Citing trading sources, Reuters said Sinpoec’s move was purely mathematical and not geopolitical.
In May and June, Sinopec bought some 20 million barrels of Russian ESPO crude, but is expected to purchase less for July because it was outbid by Indian refiners. According to the report, Sinopec bid for Russian ESPO at a $20-per-barrel discount to the Middle East benchmark price. Other Chinese buyers, including state-owned CNOOC and PetroChina, outbid Sinopec in July.
That $20 discount is what Sinopec was getting in May and June, but for July, other bidders are offering to lift Russian ESPO for a $13 discount, and some for as low as an $8 discount, according to Reuters.
Russia’s invasion of Ukraine in February and subsequent Western sanctions saw both China and India race to scoop up discounted Russian crude, netting Moscow’s war coffers some $24 billion in March, April and May from sales to the two Asian nations alone, according to Reuters.
Beginning in May, however, China has seen a 14% decline in Russian oil purchases due to renewed COVID-19 lockdowns that hampered Chinese demand.
Last week, Bloomberg reported that Russian crude exports to China and India were down 30% from their peak in April and May, shortly after Russia launched its invasion of Ukraine and sanctions were put into place.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com