China shifts oil imports from Russia to Middle East
In a significant shift, China has increased its purchases of oil from the Middle East, seemingly at the expense of Russian imports. This development follows Russian President Vladimir Putin's recent visit to Beijing. According to Chinese customs data cited by The Moscow Times, the trend of declining Russian oil imports into China accelerated after the trip in May.
Russian oil companies are grappling with a stark drop in demand from China. In July, Russian oil exports to China fell by 7.4% year-over-year to a total of 1.76 million barrels per day, marking the lowest level since at least the end of 2023. Over a four-month period, oil deliveries to China plummeted by 30%, and by 22% since the start of the year, compared to 2.25 million barrels per day in December.
This shortfall has been filled by increased imports from the Middle East. Saudi Arabia's oil exports to China surged by 13% year-over-year in July, reaching 1.51 million barrels per day. Imports from Malaysia, serving as a major transit hub for oil from sanctioned countries like Iran and Venezuela, skyrocketed by 61% to 1.46 million barrels per day.
Despite the drop, China remains Russia's largest oil customer, accounting for 43% of all its exported barrels, experts at CREA note. Oil alone makes up nearly two-thirds of Russia's exports to China, with raw materials representing more than 90%.
The decline in Chinese demand has dealt a blow to the Russian economy. July saw revenue drop to an annual low of €656 million ($730 million) per day, according to CREA estimates. Export income from oil fell by 5% from June to €219 million ($244 million) per day, while physical shipment volumes shrank by 9%.
China's overall oil imports in July were the lowest since September 2022, highlighting a broader shift in the global energy market.