China is increasingly basing its energy supply on its main oil supplier, Russia, and on coal from Australia. Oil imports from Russia increased by 13 percent year-on-year in July to 8.1 million tons or 1.9 million barrels, according to the Chinese customs administration on Sunday. Since the beginning of the year, these imports have increased by 25 percent to 60.7 million tons. From January to July, on the other hand, China received 52.2 million tons of oil from its second largest supplier Saudi Arabia, almost five percent less than in the same period last year.
In July, China imported more coal from Australia than it had in three years, totaling 6.31 million tons. This was mainly burned in power plants, which covered the increasing demand for electricity from air conditioning systems in view of the hot summer. A smaller part was used for steel production. According to traders, the Australian commodity was cheaper than domestic coal of the same quality. The price advantage amounts to the equivalent of 9.62 dollars per ton.
China imported almost nine million tons of coal from Russia, just under the record 10.7 million tons in June. 15.8 million tons came from Indonesia. China is likely to become increasingly important for Russia among its foreign oil customers. According to estimates, Russian oil exports are likely to fall overall – due to increasing domestic demand. According to market estimates, Russia exported 18 percent less crude oil via its western ports in July than in June, as domestic refineries demanded more. Due to the high demand from China and India, oil exports should also become increasingly profitable for Russia. Because the price reduction as a result of western sanctions is melting away. According to insiders, the price of oil that flowed through the East Siberian Pacific Pipeline (ESPO) in July was five to six dollars per barrel below the benchmark Brent oil exchange price. For deliveries in March, the discount was still $8.50.
The G7 states and other countries had imposed price caps on oil and oil products from Russia due to Russia’s war against Ukraine. They are to be enforced by prohibiting companies from these states from offering transport, insurance and financial services if they are sold at higher prices. Chinese refiners source Russian oil through intermediaries to circumvent these sanctions.