U.S. Sanctions Boost Russian Oil in the Chinese Market

Beijing/Moscow: Analysts have stated that after U.S. sanctions and blockades on Venezuela and Iran disrupted oil supplies to China, Russian companies may increase oil sales to China and be able to reduce discounts.

According to the international energy analysis firms Kpler and Argus, Venezuela was supplying 690,000 barrels of oil per day to China. However, after the U.S. military imposed a blockade on Venezuelan exports and seized oil tankers, this supply to China has almost completely halted.

Analysts have said that if oil supplies from Iran to China are also cut off, a similar effect will occur. This will increase China’s dependence on Russian oil as an alternative source.

This situation has given Russia an opportunity to negotiate more strongly in the Chinese market. Currently, Russia has been selling Urals-grade oil to China at a discount of $6 to $7 per barrel. However, with alternative sources for China becoming limited, it is analyzed that Russian companies may reduce this discount.

According to analysts, U.S. President Donald Trump’s “imperialistic adventurist” policy is inadvertently helping to strengthen the Russia-China alliance. Furthermore, it appears this could also improve Russia’s economic situation, as selling oil at higher prices would increase revenue.

With oil imports from Venezuela and Iran halted, China is forced to increase its dependence on Russia for its energy security. This appears to add another dimension to the strategic partnership between the two countries. While U.S. sanctions have increased geopolitical competition in the global energy market, Russia has the potential to gain both economic and political benefits from this situation.