hina is set to make headlines with its record-breaking purchases of Russian crude oil this month. According to Bloomberg data analyzed by Kpler, the Asian giant’s imports are expected to soar to 1.7 million barrels per day, marking a significant uptick in energy cooperation between Beijing and Moscow. This surge includes an unprecedented intake of Sokol oil, traditionally favored by India, which is projected to triple from last month, reaching an all-time daily high of 379,000 barrels.
The increase in ESPO (Eastern Siberia Pacific Ocean) oil flows to China, hitting their highest levels since January 2023, is more than just numbers. It symbolizes a deepening trade partnership heralded by Foreign Minister Wang Yi as a “new paradigm of major-country relations.” Yet, beneath the surface of these burgeoning ties lies the notable retraction of Indian buyers, signaling a shift in the global oil market’s dynamics.
India’s reluctance stems from the West’s intensified sanctions against Russia, making the lucrative discounts previously enjoyed by Indian importers harder to sustain. Last year, India emerged as the largest market for Russian seaborne crude exports. However, the tightened grip of Western sanctions is reshaping the market landscape, pushing Indian buyers away and elevating China’s role as Moscow’s primary crude consumer.
The sanctions’ impact is far-reaching, targeting 50 tankers by mid-February for transporting Russian crude above the G7-imposed price cap of $60. Among those affected is Russia’s state tanker firm Sovcomflot, now facing operational challenges. For buyers, this translates into increased freight costs and the arduous task of sourcing available tankers. Meanwhile, the discount on Russia’s Urals oil mix has widened by $4 per barrel in February, reflecting the sanctions’ economic ripple effects.
As Indian imports of Russian crude dwindled by 420,000 barrels a day in February, the landscape for Russian oil exports is undeniably shifting. Although China’s appetite for Russian crude is growing, its traders reportedly view Moscow’s prices as steep, and the specter of secondary sanctions from the US and its allies looms large. This potential for sanctions raises concerns among Chinese banks, which might hesitate to engage in trade, signaling a complex web of economic and political calculations behind each barrel of oil traded.
As the global energy market continues to navigate these turbulent waters, the evolving relationships between Russia, China, and India highlight the intricate dance of diplomacy, economy, and energy needs shaping our world.