Due to Western sanctions against nations like Russia, Iran, and Venezuela this year, China has been able to save billions of dollars on its oil imports.
A brief about China made savings of billions despite this year’s high oil imports
China has expanded its purchases from countries that have been sanctioned, which has led to significant cost savings at a time when rising crude oil prices are raising fears about global inflation.
According to information from traders and shiptrackers cited in a Reuters investigation, China has saved about $10 billion by making record-high crude oil imports from nations subject to Western sanctions.
The unintended result of US and other Western sanctions has been a decrease in the cost of oil imports for Chinese refiners, especially little-known private businesses referred to as “teapots.”
China imported a record 2.765 million barrels of crude oil per day by sea from these three sanctioned nations in the first nine months of 2023.
This replaced imports from the Middle East, West Africa, and South America and made up a quarter of China’s imports during this time, up from around 20% in 2022 and doubling the 12% share in 2020.
Based on pricing differences relative to other crude kinds, China saved $4.34 billion during the first nine months of 2023 by acquiring Russian oil. China saved an average of $10 per barrel on purchases of Venezuelan oil, and almost $15 per barrel on Iranian petroleum.
Since state refiners Sinopec and PetroChina refrained from making these acquisitions, China’s teapot refiners have benefited from inexpensive oil imports from Iran and Venezuela.
Since last year, the processing capacity of these teapots has improved, leading to larger profit margins.
