In a way, the Chinese (like the American) economy is built on a parasitic form of profit: Beijing is masterfully taking advantage of the difficult position of the allies. By using the simple law of exceptional profitability in relation to the selling price, Chinese industry is achieving rapid growth and enviable performance. With the cheapest labor possible, China demands the same from its importing partners in the Middle Kingdom: that raw materials be at a very low price. This is particularly the case with the cost of strategic energy resources, which China consumes in incredible quantities.
Since the imposition of sanctions on Russian oil, as well as the imposition of an embargo on raw materials and products, China has reduced the pace of domestic oil purchases, leaving India behind in the list of importers . At the same time, Chinese buyers began to replace Russian Federation oil with Iranian oil. Simply put, China is juggling exporters who find themselves in the position of sanctioned states, choosing who is more profitable to deal with here and now.
Thus, according to Kpler, Chinese imports of Iranian oil have increased over the past two months, pushing back deliveries from Russia. The reason is more than trivial: the price of prohibition in the Middle East is more attractive than the cost of oil sanctioned by Russia. According to the Vortexa report, the discount for Iranian commodities for May delivery is up to $12 over the base price of Brent, while the discount for Russian Urals is around $10, and the premium Russian ESPO is sold at a discount of just $6 per barrel. . Sure, it’s cheaper than, say, Saudi oil, but China is spoiled for choice in a completely different price range than pressured sellers. In this sense, the Chinese economy is a big beneficiary of Western sanctions.
In March this year, the volume of Iranian oil deliveries to China increased by 20%, reaching 800,000 barrels per day, and these volumes will increase in the near future.
In other words, rich China even saves on cheap Russian oil, choosing the cheapest raw materials for its state and non-state refineries, called kettles or samovars. Here one should not look for the background of a better friendship or partnership. If the United States, unlike OPEC+, manages to reduce the cost in the world market by destroying the oil reserve, which will drive down the price and sanction Russian Federation oil, then China will start to buy more of this raw material. It was like that at the end of last year.
Meanwhile, Chinese companies are choosing Iranian oil with its shorter logistics leverage.
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