Russia has surpassed Saudi Arabia to become China's biggest oil supplier in the first two months of 2023 as consumers bought up sanctioned Russian oil at deep discounts according to Chinese government data.
According to data from the General Administration of Customs, arrivals from Russia reached 15.68 million tonnes, or 1.94 million barrels per day (bpd), in January and February.
This is an increase of 23.8 percent from 1.57 million bpd in the similar period of 2022.
With a shipment of 86.2 million tonnes, Russia was China's second-largest crude supplier in 2017.
Saudi crude imports were 13.92 million tonnes during the course of the two-month period, or 1.72 million bpd, down from 1.81 million bpd the previous year.
Saudi Arabia, which sold 87.49 million tonnes of crude during the year, or 1.75 million bpd, was China's biggest supplier in 2022.
Following Moscow's invasion of Ukraine, Western sanctions and a price ceiling on seaborne Russian crude have reduced the market for Russian supplies, causing it to trade at significant discounts to global benchmarks.
One of the biggest benefactors of this change in pricing power has been independent Chinese refiners, many of which are located in Shandong province.
February-arriving Russian ESPO crude at Shandong ports was bought in January at a discount of about $8 relative to the ICE Brent benchmark, though the pricing advantage has been somewhat eroded by the entry of private Indian refiners into the ESPO market.
However, with domestic fuel demand rising following the lifting of COVID-19 restrictions, state-owned Sinopec and PetroChina resumed their purchases of Russian Urals grade cargoes in February after a brief pause in late 2022, just before the European Union embargo on Russian oil started.
Chinese refiners use intermediary traders to handle shipping and insurance of Russian crude to avoid violating Western sanctions.
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