China has stepped up imports of Arctic Russian crude grades in the latest sign of a re-routing of Russian oil deliveries internationally.
The shift was reported by Bloomberg, which cited data from Vortexa and Kpler, with the Vortexa data showing that China only bought its first cargo of Arco-a sour, heavy crude-in November last year. According to traders that Bloomberg spoke to, the grade could displace some Iraqi oil imports.
"The re-routing of Arctic grades is absolutely taking place," Viktor Katona, lead crude oil analyst at Kpler, told Bloomberg. "Russia's Arctic grades were among the Europe-oriented streams that since Dec. 5 have to find new homes elsewhere, and in all of those cases it's pretty much an India and China split."
Meanwhile, India is also ramping up imports of Arctic Russian crude. Last month the first-ever cargo of the Varandey crude blend from the Timan-Pechora oilfields, operated by Russian firm Lukoil, reached India, according to data from Vortexa.
Since the Russian invasion of Ukraine, India-the world's third-largest crude oil importer-has also bought cargoes of other Russian crude grades from the Arctic, such as Arco and Novy Port Light-the same grades that China is now importing, according to the latest data.
Previously, Arctic crude was shipped to Europe but flows have been shifting as the EU targeted Russia's energy industry with a series of sanction moves that culminated with an embargo on most Russian crude oil imports that came into effect on December 5. An identical embargo on Russian fuels is scheduled to come into effect on February 5.
As a result, China and India have replaced Europe as the largest buyers of Russian oil, with India raising its intake of Russian crude especially markedly. From a marginal exporter before the war in Ukraine, Russia has now turned into India's biggest supplier of the commodity.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More