Ukraine invasion: how much Russian oil will China soak up after the US, Britain announce embargo?

Name: Washington bans Russian oil and gas imports over Moscow’s invasion of Ukraine
Uploaded: 2022-03-10T13:15:17.000Z
Duration: 1 min 53 s
Description: Washington bans Russian oil and gas imports over Moscow’s invasion of Ukraine

China is expected to absorb incremental amounts of Russian oil following an import ban imposed by the United States and Britain

However, uncertainty over shipping and fears of secondary sanctions mean the amount will be limited in the short term, analysts say

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China could absorb incremental amounts of Russian oil by circumventing financial sanctions, experts say. Photo: EPA

Ji Siqi

Published: 9:15pm, 10 Mar 2022Updated: 9:14am, 11 Mar 2022

China’s ability to absorb more Russian oil is limited in the short term due to payment issues, but discounted crude shunned by other buyers could become increasingly attractive if inflationary pressure mounts this year, experts said.

Western sanctions on Russia have escalated following its invasion of Ukraine, with the United States and Britain announcing bans on Russian oil imports on Tuesday, though the European Union, which relies heavily on Russian energy products, has not followed suit.

The Kremlin said it would restrict exports of some goods and raw materials in response to the sanctions, without defining what would be included.

China is expected to absorb incremental amounts of Russian oil by circumventing financial sanctions, as it did with Iran and Venezuela in the past few years. But its ability and willingness to do so depends on the time frame, according to Michal Meidan, director of the China Energy Research Programme at Oxford Institute for Energy Studies.

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Washington bans Russian oil and gas imports over Moscow’s invasion of Ukraine

“In the near term, the ability to soak up more crude is limited as demand growth is uncertain and the financial mechanisms are unclear,” Meidan said.

Russia was China’s second largest crude oil supplier in 2021, accounting for around 15.5 per cent of total imports, according to data from Chinese customs.

In February, while announcing their friendship had “no limits”, the two countries struck a 10-year agreement for Russia to supply 100 million tonnes of crude oil to northwestern China.