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26 Feb, 2024 05:30

China snapping up stranded Russian crude – Bloomberg

A number of tankers with Sokol grade oil have reportedly been stranded off the coast of India due to Western sanctions
China snapping up stranded Russian crude – Bloomberg

Chinese refiners have been snapping up cargoes of Russia’s Far East Sokol grade oil that have been stranded off the coast of India due to Western sanctions and thus undeliverable, Bloomberg has reported, citing vessel-tracking data by Kpler.

Mostly private Chinese refiners have taken delivery of an average of 168,000 barrels a day of Sokol so far this month. This is three times above the pace in January and well ahead of the 53,000 barrels averaged in 2023, according to Kpler. Meanwhile, supplies to India have been about 119,000 barrels a day this month after a halt in January and December. This is down from 140,000 barrels last year.

China and India have emerged as major buyers of Russian crude since Moscow redirected its cargoes from Europe eastwards following Ukraine-related sanctions. Since April 2022, India’s imports of Russian oil have soared more than tenfold, surging significantly after the G7 imposed a $60-per-barrel cap on seaborne Russian crude.

However, recent deliveries to India have reportedly been hampered by payment and pricing issues stemming from Western sanctions. The US Treasury pledged in December to ramp up enforcement of the price cap on Russian crude exports in an effort to close loopholes.

“Initially, that [Russian oil price cap] led to Western buyers avoiding the cargoes, but since late last year, Indian refiners have also encountered difficulties, including issues with payments and disagreements about discounts,” Bloomberg wrote.

According to the outlet, citing traders, Chinese refiners bought their February-delivery Sokol cargoes at discounts of about 50 cents a barrel to ICE Brent benchmarks.

Market experts recently told Reuters that while these new restrictions may reduce the number of ships carrying Russian oil in the short term, they are unlikely to be a serious impediment to Russia’s oil trade with India given its profitability for both countries.

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