China Eyes Cheap Russian Oil to Fill Strategic Reserves

China is discussing with Russia for cheaper oil imports as it seeks to refill its strategic oil reserves. It signals China’s intentions to strengthen energy cooperation with Russia, at a time when Europe works toward banning imports due to Moscow’s attack on Ukraine.

Beijing has been discussing with Moscow for additional supplies, which it plans to use for filling its strategic petroleum reserves. The talks are being conducted at the government level with little involvement from oil companies.

Following Russia’s invasion of Ukraine, oil prices have rallied but the price of Russian oil has plummeted as buyers try to stay clear from it in order not to damage their reputation or being swept up in financial sanctions. That creates an opportunity for China to cheaply replenish its vast strategic reserves, which are typically tapped during times of emergencies or sudden disruptions.

Details on volumes or terms of a potential deal haven’t been decided yet, and there’s no guarantee an agreement will be concluded.

The U.S., the UK and Canada placed bans on Russian oil imports and the EU works toward a similar step. However, Russian oil still flows to willing buyers, particularly India and China. Asian nations find heavily discounted oil is an opportunity too good to pass up.

Refiners in China have kept buying Russian crude since the invasion although strict Covid-19 lockdowns in China have dented consumption. Apparent oil demand last month slumped 6.7% year-on-year as strict lockdowns confined millions to their homes. The outbreak has capped further gains in oil prices, although Brent is still up more than 40% this year.

It is estimated that overall stockpiles of China are at 926.1 million barrels, up from 869 million barrels in mid-March, but still 6% lower than a record in September 2020. By comparison, the US Strategic Petroleum Reserve has a capacity of 714 million barrels. It currently holds about 538 million barrels.

China has sold some crude from its strategic reserves last year in a joint effort suggested by the U.S. to tame skyrocketing prices. The action had little impact and caused China to restock at higher prices.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

Libya’s Oil Production Keeps Falling After Attacks

Libya said it expects its oil production to drop another 200,000 barrels/day after militias shut down the country’s biggest oil field, Sharara, which caused the output to fall by 350,000 barrels/day two weeks ago. The attacks will reduce Libya’s production to 700,000 barrels/day. 

Kenya Set to Elect a New Leader After 10 Years of Kenyatta Rule

Kenya is set hold elections on August 9 to choose a new president, parliament, county governors and assemblies. President Kenyatta will be stepping down after completing his constitutionally allowed 10 years. While many voters want change because of corruption and skyrocketing prices, both frontrunners have ties to Kenyatta. Among the two candidates, opposition leader Odinga has received Kenyatta’s endorsement, but Ruto has been his deputy president in the last decade before the two fell out.

Government Pushes Rolls Royce for Britain’s First Small Modular Nuclear Reactor

Rolls Royce set to build Britain’s first small modular nuclear reactor (SMR) after the government has committed 210 million pounds for the project in an effort to reach net zero carbon emissions. Britain has been planning to introduce more nuclear power as well as wind and solar to reach net zero emissions by 2050, but large scale nuclear projects have had difficulty finding investment. 

Stay informed

error: This content is protected !!