China in talks with Russia to buy oil for strategic reserves: Report
May 21, 2022
Beijing [China], May 22 : China is seeking to refill its strategic crude stock pipes with discounted Russian oil, a sign that Beijing is strengthening its ties with Moscow as the country stands alone after launching its military operation against Ukraine.
Responding to whether China supports Russia by buying more energy and other commodities, Foreign Minister spokesperson Wang Wenbin on Friday said, "China and Russia will continue to conduct normal trade cooperation in the spirit of mutual respect, equality, and mutual benefit."
Wenbin said that China does not agree that the issues could be resolved with the sanctions, which they claimed "lack the basis of international law".
"Reality has long proven that sanctions not only fail to resolve problems but will create new ones," Al Jazeera quoted Wenbin as saying.
The US and UK have already banned the import of Russian oil. European Commission President Ursula von der Leyen announced a ban on Russian oil in early May and said, "Putin must pay a price, a high price, for his brutal aggression."
Since the western countries imposed the ban on Russian oil, there has been a shift in the way the global oil market operates as the analysts predicted that the 2.5 billion barrels of oil a day that was originally headed to the EU will no longer find a home, as reported by Al Jazeera.
"We're going to see a structural change in the global oil market, really, in the form of Europe no longer being reliant on Russian energy," Caroline Bain, chief commodities economist at London-based economic research firm Capital Economics said.
While China is willing to buy the remaining oil, it will face higher transportation costs. As redirecting the Russian oil by sea to China would require supertankers, making weeks-long journeys from the Black Sea to the Mediterranean, and then through the Suez Canal before reaching Asian ports.
Meanwhile, Iran's export to China has also witnessed a sharp fall since the Ukraine war began, according to Al Jazeera citing a new report by data and analytics firm Kpler. The report also indicated that Beijing has been buying up the Russian Ural, the benchmark for Russian crude, at a heavy discount since February.
"China is now clearly buying more Urals cargoes. Exports of Urals to China have more than tripled. That comes despite a weakening in Chinese imports," Homayoun Falakshahi, a senior analyst at Kpler said.
