Russia offered China discounts on its oil after numerous Western governments imposed economic sanctions on it as a result of its invasion of Ukraine, and China seized the opportunity.
Russia has fewer customers after sanctions were imposed by several Western governments and businesses. So it started giving nations discounts on oil as a response. The nation that has seized the offer the fastest in China. Even before the conflict in Ukraine, China was one of the biggest consumers of Russian oil. However, as soon as Russia began attacking Ukraine, Beijing’s purchases of oil from Moscow only grew.
China has urged for an early conclusion to the war while deciding to remain silent publicly about Russia’s attacks on Ukraine out of economic considerations.
China is expected to stay on its current track, according to observers, according to Portal Plus. China has justified its decision to buy oil from Russia by arguing that it must obtain crude oil from wherever it is sold for a low price.
Although Russia continued to be China’s top supplier in July for the third consecutive month, it also continues to purchase oil from the Middle East, Angola, and Brazil.
China purchased 14.5 million barrels of oil from March to May, a threefold increase from the same time last year.
According to Portal Plus, citing Asia Times, the world’s second and third largest oil producers, Russia and Saudi Arabia, have been engaged in a one-month oil price war, which has caused global oil prices to drop by more than 60% since the year 2020 began.
Oil prices and futures contracts had fallen to levels not seen in decades as a result of the Covid-19 pandemic’s negative economic effects.
Given the current situation, diplomatic ties between Russia and China are strengthening daily as a result of Russia’s growing dependence on China.
China has become so important to Russia since the majority of Western sanctions have forced Moscow to accept China as its primary market, according to Portal Plus, which quoted Ukrainian analysts.
Oksana Lesnyak, Head of the Asia-Pacific Bureau of the Kyiv-based Center for Global Studies Strategy XXI, was quoted by Portal Plus as saying that China’s imports from Russia increased by a record-breaking 80% in May of last year.
However, because of its COVID-19 lockdowns and real estate crises, China is now going through financial troubles. Therefore, if it has the chance to replenish its soil reserves by buying less expensive oil, it will undoubtedly take it.
“Lots of these things can be done more constructively behind the scenes than in the limelight”, Portal plus quoted China expert Victor Gao, a professor at China’s Soochow University and vice president of the Center for China and Globalization as saying.
“As this relationship develops, Russia’s position will become weaker, hence China will be pushing for higher discounts on Russian oil and gas exports”, he added.
The European Union is expected to impose further sanctions on Russia in the coming December. It is expected to include a ban on insurance for tankers transporting Russian oil. A price cap on Russian oil is also expected later, reported Portal Plus.
So, the situation provides China with an upper hand while negotiating oil prices with Russia and demand more discount on oil and it will ensure grabbing the opportunity with both hands.
In the upcoming December, the European Union is anticipated to implement more sanctions against Russia. A prohibition on insurance for tankers carrying Russian oil is anticipated to be part of it. According to Portal Plus, a price ceiling on Russian oil is also anticipated later.
As a result, China will have the upper hand when negotiating oil prices with Russia and will be able to demand a larger oil discount, making sure to seize the moment with both hands.