Russia's pipeline oil exports to China via the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline were flat between January and October compared to the same period of 2021, according to China National Petroleum Corporation's (CNPC) Vice President Huang Yongzhang.
Russia sent 33.26 million tons of oil to China via pipeline in the first ten months of this year, Huang was quoted as saying by Russian news agency TASS at a Russia-China energy forum.
While pipeline oil deliveries were basically unchanged this year, China has significantly increased its seaborne imports of Russian crude as Beijing and India have now emerged as the top buyers of Russian oil after the Russian invasion of Ukraine, as Western buyers shun Russia's crude and prepare for the EU embargo on imports of Russian oil as of December 5.
Just ahead of the ban and the G7-EU price cap on Russian oil, some Chinese buyers have been hesitant to purchase Russian cargoes, as they wait for details on how the price cap would be enforced.
Yet, both China and India are now demanding huge discounts for the Russian oil they are willing to buy, Bloomberg oil strategist Julian Lee wrote in a recent analysis.
Currently, China and India account for around two-thirds of Russia's crude oil exports by sea, and the Asian buyers are exercising the negotiating power they have over Russia, Lee notes. If Russia wants to continue selling its oil to its new top customers, it must contend with the deep discounts the two buyers demand.
As of the end of last week, Russia's flagship crude grade, Urals, traded at $52 per barrel-a $33.28 discount to Brent Crude. This compares with the 2021 average discount of Urals to Brent of $2.85.
The huge discount costs the Kremlin some $4 billion in lost revenues every month, according to estimates from Bloomberg's Lee.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More