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China shifts to purchasing Russian oil as India steps back, Bloomberg

China shifts to purchasing Russian oil as India steps back, Bloomberg Illustrative photo (Photo: Getty Images)
Author: Daria Shekina

China's oil refineries have started to take larger volumes of oil from Russia, which their counterparts in India largely avoid due to fears of sanctions, reports Bloomberg.

This month, private refiners mainly extracted an average of 168,000 barrels of Sokol per day, which is three times more than in January and significantly exceeds the 53,000 barrels in 2023.

Meanwhile, oil flows to India this month amounted to about 119,000 barrels per day after halting in January and December, but lower than 140,000 barrels last year.

China and India have become the largest consumers of Russian oil, including ESPO and Sokol, following Russia's invasion of Ukraine in 2022. The war prompted a series of US-led sanctions against Russia, as well as mechanisms to limit oil supply prices.

Initially, this led Western buyers to avoid shipments, but since the end of last year, Indian refineries have also faced difficulties, including payment problems and discrepancies over discounts.

China purchased oil at a discount

Chinese refineries reportedly bought a batch of Sokol oil in February at a discount of about 50 cents per barrel to the ICE Brent benchmark.

Due to supply disruptions to India, nearly 15 million barrels of Sokol destined for delivery to the country are currently stranded on tankers off the coasts of Malaysia and South Korea.

What preceded

India's state-run oil refineries were forced to halt purchases of this grade last year after the government advised them not to use Chinese yuan to buy Russian oil amid strained relations between New Delhi and Beijing.

Reuters noted that India did not receive Sokol oil in December and January.

Earlier in February, the news agency reported that crude oil imports to India from Russia had fallen for the second consecutive month to the lowest level in a year, citing Western sanctions as the reason.

However, India has recently resumed importing Russian Sokol oil. The supply was suspended for two months.