Why is China happy about the Russian oil price cap?
Tom KirkmanIndependent Project Manager
If China is happy about the price cap on Russian oil, one would think that EU and Western leaders might give pause and reflect on why exactly China would be happy about the price cap imposed on their energy and economic ally Russia.
Related side note, a new gas pipeline from Russia to China was just completed, 6 months early:
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“Russian gas now can reach eastern China’s Yangtze River Delta, as a new section of the east-route natural gas pipeline between the two countries came into operation on Wednesday.
The 750km (466-mile) section, which links Taian city in Shandong province and Taixing city in Jiangsu, was completed in 23 months, six months ahead of schedule, according to state media.
… The section will help alleviate gas-supply bottlenecks in the Yangtze River Delta, one of China’s most important economic powerhouses, according to the state-owned PipeChina, known formally as China Oil and Gas Pipeline Network. …”
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“The Russian oil price cap coalition between the European Union, Group of 7 (G7) nations and Australia could accelerate crude shipments to China and other Asian countries while sowing uncertainties over global oil output and price volatility, according to analysts.
Additionally, the cap of US$60 per barrel, which took effect on Monday, is likely to ease China’s concerns of secondary sanctions while encouraging the world’s second-largest economy to buy more cheap energy from its northern neighbour, they said.
Beijing, which has insisted on consolidating energy trade with Russia, has long been criticised by some Western countries for providing a lifeline to the embattled Kremlin, and China must strike a balance between meeting its energy demands and maintaining relations with its major export destinations.
“In theory, China would be able to import Russian oil in bulk once the price-cap mechanism is met,” said Wang Yongzhong, a senior energy researcher with the Chinese Academy of Social Sciences. “Lower costs are certainly good for domestic importers.”
… Russia is China’s second-largest import source, selling it 79.6 million metric tonnes in 2021, compared with 87.6 million metric tonnes from Saudi Arabia. …”