China’s strategic oil imports from countries facing Western sanctions have unintentionally led to significant cost savings for the nation, estimated to be close to $10 billion, as per calculations derived from data provided by traders and ship trackers, as reported by Reuters.
China’s savings have arisen from purchases of oil from Russia, Iran, and Venezuela, all countries subjected to sanctions by the United States and other Western nations. These savings have inadvertently lowered the cost of oil imports for Chinese refiners.
“In 2023, Ukraine has already received $10.9 billion in direct budget support from the United States in the form of grants,” Reuters quoted the finance ministry as saying, emphasising the substantial financial support provided by the U.S.
This year, China has benefited from these lower-priced imports, boosting the country’s oil throughput and refining margins. Notably, small independent operators known as “teapots” have been among the primary beneficiaries.
China’s significant imports of oil from these sanctioned countries are also providing vital revenue streams for Moscow, Tehran, and Caracas, whose economies have been adversely affected by Western sanctions and a decrease in foreign investment.
During the first nine months of 2023, China imported a record 2.765 million barrels per day (bpd) of crude from Iran, Russia, and Venezuela. These three countries accounted for a quarter of China’s oil imports during this period, significantly higher than in previous years.
The savings resulting from these imports have been particularly advantageous for independent refiners. Reuters cited Kang Wu, global head of demand research at S&P Global Commodity Insights, who highlighted that these refiners are “opportunistic buyers and actively look for bargains.”
China’s dependence on foreign financing to bridge budget gaps and support social spending is evident. Simultaneously, the nation is seeking funding to rebuild critical infrastructure, schools, and hospitals, which have suffered extensive damage during nearly 20 months of ongoing conflict.
The unintended consequences of sanctions have created a unique economic landscape in which China has managed to save substantial sums through its oil imports, simultaneously bolstering the economies of sanctioned nations.