What is China position after the Russia invasion of Ukraine?
What has changed in Sino-Russian relations since the Ukraine war?
What have strategic relations between China and Russia improved following Western sanctions on Russia?
Why do experts predict that oil prices will rise in the coming days?
If China supports Russia in its invasion of Ukraine, what will the US do and what will the consequences be for China?
Reduce Chinese Crude Oil Imports from Russia
China’s crude oil imports from Russia fell by over 9% in the first two months of this year as independent refineries cut their purchases of crude oil from Russia, according to the General Administration of Customs. Furthermore, it is unclear how much crude oil China will import from Russia, given the fact that China does not shy away from Russia. However, some large state-owned Chinese banks have stopped issuing dollar bills to buy Russian goods. Some independent refineries seem to be looking for alternatives as they cannot guarantee the validity of such documents. China, on the other hand, has generally not complied with Western sanctions, so it is possible that it could see the Ukraine-Russia war as an opportunity to buy Russian crude at a big discount.
Increasing Saudi Oil Exports
It did not take long for Saudi Arabia to replace Russia as the largest exporter of crude oil to China. Chinese oil imports from Saudi Arabia averaged 1.81 million barrels per day (bpd) while China’s crude oil imports from Russia reached 1.57 million barrels per day, down 9.1% year on year as independent Chinese refineries cut overall imports. This is because Chinese officials at the end of last year gave 11% less crude oil import quotas to independent refineries in the first batch of quotas for 2022. According to a document provided by Reuters, Hengyi Petrochemical and Shenghong Petrochemical together accounted for about 38% of the first category import quota. This shows that China is currently supporting quotas for newer and more sophisticated private refineries as it cracks down on smaller, more polluting independent refineries, some of which are under investigation for alleged taxation and illegal trade practices.
China Seeks to Buy Russian Crude at a Big Discount
In the coming months, however, China may turn to more barrels of Russian crude at discounted prices, which could make Russia the largest supplier of crude oil again to the world’s largest oil importer. Some Russian oil producers reportedly sell crude oil to China without a bank guarantee.
The Possibility of a Sharp Rise in Oil Prices
Speculation was that if Europe and the US banned Russian oil imports, world oil prices could rise to $300 a barrel. Oil prices have risen to their highest level since 2008 in recent weeks due to the implementation of a ban on Russian oil imports by the West following the Ukraine war. It can be said that oil prices could have doubled from pre-war levels, but are not worse than the 1973 oil embargo, which tripled oil prices. Rystad Energy analysts said the $200 estimate is based on the assumption that Western sanctions could remove about 4 million barrels a day of Russian oil on world markets. Russia, the world’s second-largest oil exporter, supplies about 7 million barrels per day of crude oil and petroleum products to the world economy.
US Warns China
The US has warned China not to help Russia in the Ukraine war; otherwise, it will have entail consequences for it. US National Security Adviser Jake Sullivan conveyed the warning to Yang Jiechi, a top Chinese diplomat, at a meeting in Rome after Washington claimed that Moscow had asked China to send weapons. Both the Kremlin and the Chinese Communist Party rejected the claim, with the Chinese Foreign Ministry calling it “disinformation.” If Chinese President Xi Jinping fully supports Vladimir Putin’s government, the United States may cut ties with China and ban US technology from entering the country.
The Grave Consequences of China’s Support for Russia
“We are communicating directly, privately to Beijing, that there will absolutely be consequences for large-scale sanctions evasion efforts or support for Russia to backfill them,” said the US National Security Adviser. “We will not allow that to go forward and allow there to be a lifeline to Russia from these economic sanctions from any country, anywhere in the world,” he added. The news of Russia’s request for help from China came about three weeks after the start of a war in which analysts predicted that Putin would win immediately and decisively. The Kremlin continues to claim that the war is “on schedule” and that Russia can achieve its goals without outside support. However, Viktor Zolotov, chief of Russia’s National Guard and a member of Putin’s Security Council, admitted that they had failed in some cases. “I would like to say that yes, not everything is going as fast as we would like.” “…But we are going towards our goal step by step and victory will be for us, and this icon will protect the Russian army and accelerate our victory,” he claimed.
China’s Involvement in the Russia-Ukraine War
Although China does not actively support Russia in this war, Beijing is treading a thin line between maintaining its strong alliance with Russia and trying not to cast a shadow over its relations with the West. In the weeks before Putin’s attack on Ukraine, President Xi met with his Russian counterpart and agreed to an “unlimited” upgrade of their relations. The two also issued a joint statement against NATO. However, the Chinese Communist Party (CCP) sought to remain neutral in the face of Putin’s war, calling the situation in Ukraine “worrying.” A spokesman for the Chinese Embassy in the US said a few days ago: “The high priority now is to prevent the tense situation from escalating or even getting out of control.”
China’s Contradictory Stance on the Ukraine-Russia War
In its efforts to impart neutrality, China has not openly condemned the Kremlin for invading Ukraine and has refrained from calling it an “aggression.” China’s public stance on the war has contained conflicting messages. It is clear from Beijing’s statements that it stands by Russia, but it is also concerned about the destructive effects of the Russian invasion.
The sharp rise in prices as a result of this war will have a negative impact, especially on China, which imports more oil and gas than any other country. According to Chris Johnson, a senior China analyst at the Central Intelligence Agency, China and Russia are now closer than in previous decades, and Beijing is largely obviously a senior partner in this regard. Even if Beijing intends to assist Russia in this attack, it largely reflects the personal nature of the relationship and China’s fear of Putin’s downfall.
