Sources who wished to remain anonymous said that Beijing is discussing with Moscow the purchase of additional quantities, the oil to be used to supply China’s strategic oil reserves. The talks are at the governmental level, with a low involvement of oil companies, and the details on the quantities or conditions of the potential transaction have not been decided yet, the sources claim, writes Agerpres.
The price of a barrel of oil has risen this year due to the war in Ukraine, but the price of Russian oil has fallen as buyers are reluctant to buy so as not to damage their reputation or fear of sanctions. Thus, China has the opportunity to cheaply replace its strategic oil reserves.
The foreign ministers of both countries did not respond to requests for comment.
The United States and Britain have pledged to ban oil imports from Russia, while the EU is discussing similar measures, but oil from the OPEC + group (composed of the Organization of the Petroleum Exporting States and other major producers) still reaches willing buyers, including India and China.
Chinese refineries have been quietly buying Russian crude oil since the start of the war, even though tough restrictions have reduced demand for the world’s largest crude oil importer.
Beijing does not disclose data on its oil stocks, but companies make estimates based on satellite data. Some forecasts claim that the country has the capacity to store over one billion barrels, both commercial and strategic stocks.
“There is a possibility of an increase in stocks and it would be a great opportunity for them to do that if they can get advantageous trading conditions,” said Jane Xie, an analyst at Kpler.
Kpler estimates total stocks at 926.1 million barrels, up from 869 million barrels in mid-March, but still 6% lower than the record high of September 2020. By comparison, US strategic reserves a capacity of 714 million barrels, currently being about 538 million barrels.
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