Asian nations are cutting exports of discounted Russian oil, with Bloomberg data showing a 13 percent drop over the past four weeks as Chinese and Indian demand eases, hitting Russian oil revenues.
China and India account for purchases of 55% of Russia’s marine oil exports; however, Chinese demand over the past four weeks has fallen by 52,000 barrels per day, while Indian demand has fallen 18%, according to Bloomberg.
Reuters also reports that China’s state-owned Sinopec, Asia’s biggest refiner, cut purchases of discounted Russian ESPO crude this month after refusing to outbid Indian buyers.
Citing business sources, Reuters said Sinpoec’s move was purely mathematical and not geopolitical.
In May and June, Sinopec bought about 20 million barrels of Russian ESPO crude, but is expected to buy less for July as it was outbid by Indian refiners. According to the report, Sinopec made a bid for Russian ESPO at a discount of $20 per barrel 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 raise Russian ESPO for a discount of $13, and some for as low as $8, according to Reuters.
Russia’s February invasion of Ukraine and subsequent Western sanctions saw both China and India flock to scoop up discounted Russian crude, adding about $24 billion to Moscow’s war coffers in March, April and May only from sales in the two Asian nations, according to Reuters.
Since May, however, China has seen a 14% drop in purchases of Russian oil as the new COVID-19 lockdown 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 penalties
By Charles Kennedy for Oilprice.com
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