China and India have stepped up purchases of Russian oil this year.
- China’s purchases of Russian oil dropped 13% in June from May, according to new data.
- China imported 7.28 million tons of Russian crude in June, compared to 8.42 million tons in May.
- The fall raises questions about Russia’s pivot to Asia, as European countries slash purchases.
China slashed its purchases of Russian oil by 14% in June compared to May as zero-COVID lockdowns knocked the economy, new data has shown.
Data from the General Administration of Customs released Wednesday showed China imported 7.28 million tons of crude oil from Russia last month, down sharply from 8.42 million tons in May.
In dollar terms, China bought $5.05 billion worth of crude oil from Russia in June, down from $5.85 billion a month earlier.
China’s imports remained higher than a year earlier, however. The country bought 6.65 million tons of Russian oil in June 2021, with lower prices meaning the imports cost $3.33 billion.
The country’s economy has slowed this year under President Xi Jinping’s zero-COVID policy, which aims to limit the spread of coronavirus by implementing strict local lockdowns.
Beijing has set an annual economic growth target of 5.5% this year. However, analysts expect growth to come in closer to 4%.
COVID lockdowns in major cities such as Shanghai in recent months have dampened the demand for energy.
The slowdown in Chinese oil purchases raises questions about whether Russia’s economy can successfully pivot towards Asia.
The European Union is phasing out Russian crude oil imports, but China and India have sharply stepped up their purchases, keeping money flowing into Moscow’s coffers as it wages war in Ukraine.
However, Bloomberg reported Monday that Russia’s crude deliveries to China and India have plunged 30% from their recent peak.
Overall, Chinese import volumes slumped in June. Imports of crude oil totaled 35.23 million tons, down 30% from 45.82 million tons in May.
“Import volumes may fare slightly better going forward as the domestic economy recovers from the recent virus wave,” Julian Evans-Pritchard, senior China economist at consultancy Capital Economics, said in a note to clients.
Yet Evans-Pritchard said problems in China’s bloated property sector might also weigh on the economy.
“Inbound shipments are likely to remain soft given relatively modest policy support and continued deleveraging among property developers,” he said.