China swoops on cheap Russian oil as Western supplies dry up

Russia has overtaken Saudi Arabia as China’s biggest oil provider as Beijing seeks to take advantage of the crisis by snapping up cheaper supplies.

China’s crude imports from Russia jumped 55pc compared to a year earlier to around two million barrels per day after Beijing ramped up purchases at a steep discount.

Data from Beijing revealed that China bought $7.5bn (£6.1bn) of Russian energy products, double the amount a year ago.

Chinese oil giants have swooped to get Russian oil on the cheap as the West seeks to wean itself off the Kremlin following the invasion of Ukraine. Vladimir Putin is also keen to diversify exports by providing more to Asia after oil embargoes agreed by the US, Europe and UK threatened to deal a huge blow to a key source of revenue for the Kremlin.

While global crude prices have soared well above $100 per barrel, Russian oil has been selling at big discounts of up to 30pc.

The increased purchases by the Kremlin’s ally threatens to undermine Western sanctions seeking to cut off revenues from Moscow.

US president Joe Biden said oil embargoes would target a “main artery of Russia’s economy” but China’s purchases suggest its energy giants are adapting to the sanctions even as Moscow faces a huge recession.

Higher energy prices also risk tipping Western economies into recession as households are squeezed by the surge in costs.

Mr Putin claimed last week that the sanctions are proving to be “more harmful” to the countries that impose them. However, economists expect Russia’s economy to endure a two-year recession.

Analysts expect oil prices to remain high as Chinese demand bounces back following lockdowns.

Mark Haefele, chief investment officer at UBS, said: “Demand for crude from China, the world’s largest importer, should slowly recover as mobility restrictions are eased.

“Crude supplies should remain tight. A pledge by OPEC+ to step up production is unlikely to lead to a significant increase in global supplies, since the group is already struggling to meet existing output targets.”