Updated: May 21
As Europe work towards banning imports from Russia due to the current war going in Ukraine, China is seeking to increase its strategic crude oil stockpile with cheap Russian oil, an indication that Beijing is strengthening its energy ties with Moscow!
Beijing is in talks with Moscow to purchase additional supplies. This has come from people with knowledge of the plan who have asked not to be named as the matter is private. The discounted crude would be mainly used to help fill China's strategic petroleum reserves. Oil companies have had very little involvement with this, as talks are being conducted at a government level.
This year oil has had a good rally during the invasion of Ukraine, but unfortunately for Russia, its own crude price has sloped as buyers take a step back to avoid financial sanctions as well as damaging their reputations. This provided an excellent opportunity for China to swipe some extremely discounted crude to replenish its massive strategic oil reserve.
There hasn’t been an immediate response to comment on this from the foreign ministries of both China and Russia.
Information on volumes or terms of a potential deal has yet to be decided. Having said that there is no guarantee the agreement will conclude.
Although the US and UK have agreed to ban Russian oil imports, crude from OPEC+ producers is still getting attention from willing buyers including India and China. The massively discounted oil has also given an opportunity too good to pass up on to smaller nations throughout Asia.
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