CHINA’S GROWING PURCHASES OF RUSSIAN OIL CARRY HIDDEN RISKS

As the Chinese economy is in the grip of a zero-covid policy, the administration of President Xi Jinping is rushing to secure stable supplies of resources by increasing purchases of Russian oil. It was visible in the city of Linyi, where one gas station had signs screaming at drivers: “Gas is 6.78 Yuan (USD 1) a litre, the lowest in China.”Car washes are also free.” The messages drew a constant line of cars waiting to fill up at the Shandong Petrochemical gas station. However, the discounted prices invite additional political costs for China, reported Nikkei Asia. 

Managers at independent oil refiners clustered in Shandong keep a close eye on the daily crude oil market. “Buy ESPO now.” ESPO stands for the East Siberia-Pacific Ocean oil pipeline. It starts in eastern Siberia and allows oil to flow to China from Kozmino and other ports in Russia’s Far East. 

Moreover, Japan, the US, and Europe responded to Russia’s invasion of Ukraine with an embargo on Russian crude oil. China has not. Data shows that 46 large vessels crossed in July from Russia’s Far East to ports in Qingdao and Dongjiakou, in China’s Shandong Province. That is 1.9 times more than made the journey in January. Companies in Shandong are quietly at work, and the amount of crude oil purchased in July was almost double that of May, reported Nikkei Asia.