Through private refinery purchases, China saved $10 billion in sanctioned oil imports
ALBAWABA – China saved $10 billion in sanctioned oil imports in 2023 from Iran, Russia and Venezuela, according to Reuters, citing data collected from traders and ship-trackers.
China oil imports from Iran were already expected to reach a years-long peak this year, according to reports from Bloomberg and Zawya.
Reuters analysed the data and concluded that China imported 2.765 million barrels per day in the first nine months of 2023, based on data by Vortexa and Kpler, from Russia, Iran and Venezuela.
The three countries accounted for a quarter of China's imports between January and September, up from about 21 percent in 2022 and double the 12 percent share in 2020, Reuters' analysis found.
Accordingly, China has this year saved $4.34 billion by importing Russian oil, based on the monthly price differentials between ESPO and Tupi crude from Brazil, and Urals versus Oman.
China saved $10 billion in sanctioned oil imports, the West helped
On imports of Venezuelan oil, mostly heavy grade Merey, China saved an average of $10 a barrel versus comparable Colombian Castilla crude, Reuters’ data showed. The People’s Republic saved roughly $15 a barrel buying Iranian crude versus Oman oil.
With January-September inflows of Venezuelan oil at around 430,000 bpd, according to the average of the Vortexa and Kpler data, China's savings from buying Venezuelan oil was $1.17 billion.
China saved $10 billion in sanctioned oil imports from Iran, Russia and Venezuela - Shutterstock
China has saved roughly $4.2 billion by importing a record 1 million bpd during the same period from Iran, 60 percent above pre-sanction peaks recorded by Chinese customs in 2017, at 623,000 bpd.
Tehran has raised output to near-maximum levels and offered discounts as steep as $17 a barrel versus Brent, displacing alternatives from the Middle East, West Africa and South America.
One unintended consequence of the sanctions imposed by the West, namely the US and Europe, on Iran, Russia and Venezuela, is lowering the import costs of oil refiners in China, Reuters reported.
How is it that China saved $10 billion in sanctioned oil imports
State refiners Sinopec and PetroChina refrained entirely from buying Iranian and Venezuelan crude. But teapots have feasted on the discounted oil from the two suppliers.
According to Chinese consultancy JLC, as reported by Reuters, teapots in the refining hub of Shandong province operated at 65.7 percent of capacity during the first three quarters of 2023, up 4.2 percent. They generated margins on processing imported crude of 567 yuan ($77.63) per ton, compared with 50 yuan a year ago.
Earlier this year, Reuters reported the Chinese customs stepped up inspections of heavy crude cargoes headed to Shandong after finding several Iranian shipments mislabelled to bypass import quotas.
If the United States (US) tightens enforcement of sanctions on Tehran over the ongoing turmoil with Gaza, that could also curb Iran's oil exports, analysts told Reuters, which mostly flow to China. But that would send oil prices soaring on already tight supplies and expected deficits.
