Wed. Oct 5th, 2022

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

ST HSIEH

June 22, 2022

Ukraine war is unfortunate and a disaster for Ukraine and Russia. While the military actions/destructions are limited inside Ukraine territory, war impact on the economy is already everywhere: a global recession is in sight. The core issue of the war, of course, is energy supply. So, oil flow and price are important issues for every economy, not just the two major warring parties: Russia and Ukraine.

  1. But after all, the world commerce has to go on and each sovereign nation makes her choice and it should be respected. So: Ukraine’s Trade Representative has a stark warning for those who choose to buy more from Russia. Taras Kachka told the BBC that that Moscow would “weaponise anything”, use their dependency as a means to manipulate and hold countries to ransom. It is very hollowing, because Ukraine is profited by charging transit fee for Russian gas every day! Kachka should tell Zelenskyy to shut down Russian gas immediately.
  2. Can Ukraine offer any alternative of Russian energy to European nations? No.
  3. Yes, “In March, the US and UK said they would ban Russian oil” and US honored the promise. But UK’s promise is to end Russian oil by the end of 2022. As of now, UK is importing and dependent on Russian energy every day. It is typical a grandstanding posture.
  4. European nations are working hard to be independent of Russian gas, but the target date is about three years away. This Russian gas dependence should not be news for European leaders: Ukraine knows the best. Unfortunately, they are still struggling!
  5. As Ukraine war goes on, it is still a regional war. Russia and Ukraine combined population is around 180 million, European adds another 750 million, the total is still less than one billion. Yet, China and India combined population is more than 2.5 billion. Each of them has to be fed, along with portable water, basic energy supply, a majority of them needs jobs, so China and India governments have to keep their economies running.
  6. Any sensible person, especially the Ukrainians, should focus on finding a solution to end the war honorably as soon as possible. Asking for more foreign military and financial supports only prolong the misery of Ukrainians. Even if the war ends tomorrow, the reconstruction of Ukraine will take generations.
  7. Russia is not sitting idly by taking all the sanctions silently, European’s 2022 winter is not far away, let us hope there is enough heating fuels for everyone.

BBC: Ukraine war: Russia becomes China’s biggest oil supplier

By Peter Hoskins
Business reporter

Imports of Russian oil rose by 55% from a year earlier to a record level in May, displacing Saudi Arabia as China’s biggest provider.

China has ramped up purchases of Russian oil despite demand dampened by Covid curbs and a slowing economy.

And Chinese companies, including state refining giant Sinopec and state-run Zhenhua Oil, have increased their purchases of Russian crude in recent months after being offered heavy discounts as buyers in Europe and the US shunned Russian energy in line with sanctions over its war on Ukraine.

The imports into China, which include supplies pumped through the East Siberia Pacific Ocean pipeline and shipments by sea, totalled nearly 8.42m tonnes last month, according to data from the Chinese General Administration of Customs.

That pushed Saudi Arabia – formerly China’s biggest source of crude oil – into second place with 7.82m tonnes.

In March, the US and UK said they would ban Russian oil, while the European Union has been working towards ending its reliance on Russian gas, as the West steps up the economic response to the invasion of Ukraine.


With fuel prices sky high, it isn’t just motorists who are filling-up when they spot a deal. Nor is it just China which has taken advantage of those discounts on offer from Russia as the latter tries to win new custom; India has also been upping purchases.

That, along with soaring crude costs, helped Russia actually grow revenues in the immediate aftermath of its invasion of Ukraine.

And for every 10 barrels of Russian oil China typically bought before the war, the UK and US between them bought one. Moscow may not struggle too hard to plug at least some of the gap as those two nations take their custom elsewhere.

But already Russia’s oil earnings have started to dwindle – and that will intensify as other European nations cast around for alternative energy sources.

Meanwhile, Ukraine’s Trade Representative has a stark warning for those who choose to buy more from Russia. Taras Kachka told the BBC that that Moscow would “weaponise anything”, use their dependency as a means to manipulate and hold countries to ransom. But as they chase a (relative) bargain at a challenging time, that warning is that those taking their custom to Russia may be loath to heed.


At the time, US President Joe Biden said the move targeted “the main artery of Russia’s economy”.

Energy exports are a vital source of revenue for Russia but the move is also likely to impact Western consumers.

Last week, a report by the Centre for Research on Energy and Clean Air think tank said Russia earned almost $100bn (£82bn) in revenue from fossil fuel exports in the first 100 days of the country’s invasion of Ukraine, despite a fall in exports in May.

The European Union made up 61% of these imports, worth approximately $59bn.

Overall, exports of Russian oil and gas are falling and Moscow’s revenue from energy sales has also declined from a peak of well over $1bn a day in March.

But revenues still exceeded the cost of the Ukraine war during the first 100 days – with the CREA estimating that Russia is spending around $876m per day on the invasion.

Monday’s figures also showed that China imported 260,000 tonnes of Iranian crude oil last month, its third shipment of Iran oil since last December.

China has continued to buy Iranian oil despite US sanctions on Tehran.

Russia leapfrogs Saudi Arabia as China’s biggest oil supplier—with some help from massive discounts

Chloe Taylor Mon, June 20, 2022, 5:26 AM

Russia has reclaimed its position as China’s biggest oil supplier, overtaking Saudi Arabia in May as Beijing cashed in on discounted Russian energy.

Last month, Chinese imports of Russian oil surged by 55% from a year earlier, according to data from the Chinese government.

The increase meant Russia surpassed Saudi Arabia as China’s biggest source market for oil, recovering the top spot after a gap of 19 months.

China imported around 8.42 million tons of crude oil from Russia in May, the data showed—the equivalent of 1.98 million barrels per day, according to Reuters.

Meanwhile, China’s purchases of Russian liquefied natural gas rose 54% from the previous May.

Total imports from Russia increased 80% year-on-year to almost $10.3 billion.

China and Russia have maintained strong political and economic ties since the latter’s invasion of Ukraine, with the country’s two presidents holding a “warm and friendly” phone call last week in which they committed to deepening the relationship between their two countries.

Russian oil discounted

Western sanctions on Russian energy in the wake of the invasion of Ukraine have forced Moscow to slash the price of its energy exports as it searches further afield for buyers to plug the gap set to be left by Europe.

In May, Reuters reported that the spot price of Russian oil was around $29 less per barrel than it was before the invasion of Ukraine and well below the price of oil from the Middle East, Africa, the U.S. and Europe.

The price of Urals—Russia’s main export blend—averaged $73.24 a barrel between mid-April and mid-May, according to Bloomberg, making it almost a third cheaper than Brent crude futures over the same period.

Urals is usually traded at a discount to Brent crude, but the gap between the price of the two products is reported to have widened drastically since Russia invaded Ukraine in late February.

According to data from Finnish fuel refiner Neste, Urals was priced, on average, at $33.63 less than Brent over the five days to Monday.

A year earlier, the price difference was around $1.50, according to Neste.

Brent crude futures were trading at more than $112 per barrel on Monday. In February, oil prices surged above $100 per barrel for the first time since 2014 on the back of Russia’s invasion of Ukraine.

Not just China

Heavily discounted prices have seen buyers other than China snap up Russian oil, potentially blunting the efficacy of Western sanctions.

India, for example, has increased its share of Russia’s total crude exports from 1% to 18% since the invasion, according to the BBC.

Last week, a report from the Centre For Research on Energy and Clean Air found that Russian revenues from oil and gas exports reached almost $100 billion during the first 100 days of the war in Ukraine, and warned that there were potential loopholes in efforts to restrict purchases of Russian energy.

The report said that India, the Middle East, France and Belgium were “dipping into discounted Russian fuels.”

These 6 European countries paid Russia $40 billion for fuel in the three months of the war, despite impending bans and sanctions on imports

Zahra Tayeb

Sun, June 19, 2022, 1:00 AM

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