Global impact Experts believe that if India maintains distance from Russian oil and China continues to buy cheaply, the balance of the Asian energy market could change.

Chinese companies increase purchase of cheap oil from Russia and Iran.

Russia-Iran Cut Oil Prices: Amid the Ukraine war and Western sanctions, the global oil market is experiencing significant changes. While India has reduced its crude oil purchases from Russia due to US pressure and the risk of higher tariffs/sanctions, China is capitalizing on this opportunity to increase its reserves by purchasing cheap oil from both Russia and Iran.

According to energy research firm Rystad Energy, India's oil imports from Russia could fall by nearly 40% compared to January, to around 600,000 barrels per day. This has reduced competition for Russian oil in the Asian market, benefiting China.

China benefits from cheap oil.

According to reports, Russia's Urals grade oil is selling for about $12 per barrel less than ICE Brent, while Iranian Light is also trading around $11 per barrel below the global benchmark. This is providing Chinese refineries with cheaper crude oil. Although China's private refineries (teapot refiners) have limited capacity and are subject to government-imported import quotas, they are trying to maximize the available opportunity.

Imports at record levels

Russian oil arrivals at Chinese ports rose to 2.09 million barrels per day in the first 18 days of February, according to vessel tracking data, up 20% from January and nearly double from December. Iranian oil exports to China so far this year have totaled about 1.2 million barrels per day, though this is down about 12% from the same period last year, according to data firm Kpler.

Additionally, Iranian oil reserves in floating tankers have reached nearly 48 million barrels, significantly higher than the 33 million barrels at the beginning of February.

Global impact: Experts believe that if India continues to distance itself from Russian oil and China continues to buy cheaply, the balance of the Asian energy market could change. This could have long-term implications for global oil prices, shipping routes, and geopolitical dynamics.