China’s independent oil refiners are buying Russian supplies on the cheap, report says

• Independent Chinese oil refineries have been buying Russian crude on the cheap, the Financial Times reported.
• It comes as the US and UK shun Russian oil, and the EU debates a total ban on imports from the country.
• Russian oil is trading at a steep discount to global benchmark prices, attracting some buyers.

Independent refiners in China are buying Russian oil on the cheap, according to the Financial Times, in moves that threaten to inflame tensions with the US and other Western governments.

The US has stopped importing Russian oil, and the UK is phasing it out. The EU on Wednesday proposed phasing in a total ban on imports by the end of 2022.

But an official at one independent Chinese refinery told the FT that it has been buying Russian oil, but not publicly reporting the deals in order to escape the ire of the US.

Shipping data suggests Chinese purchases of Russian crude have risen slightly, even though state-owned energy companies have shied away from increasing their imports from the country, the FT reported late Tuesday.

Since Russia’s invasion of Ukraine in late February and the resulting imposition of sanctions, oil produced from the country has traded at a discount to global benchmark prices.

The discount has attracted some buyers, particularly those in Asia who feel under less pressure to follow the US’ lead in slashing ties with Russia.

However, buyers have still been keen to keep a low profile so as to not draw scrutiny from the US.

There has been a sharp increase in Russian oil exports marked for “destination unknown”, the Wall Street Journal reported in late April. Bloomberg reported this week that buyers appear to be shunning imports from Russian-owned ships.

But it appears the EU is going after Russia’s global oil sales by cracking down on anyone from insurers to ship owners. The bloc is looking at a proposal to ban European companies from providing services linked to the transportation of Russian oil worldwide, Bloomberg reported Wednesday.

Swedish bank SEB said the EU’s plans to ban Russian oil mean the country will increasingly turn to Asia as an export destination. But it said the process of untying existing energy relationships would be long and complex.

“Russia will try to swing its energy exports towards Asia, but that will take billions and at least a decade or more,” said Bjarne Schieldrop, chief commodities analyst at SEB.

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