In May 2022, Russia sharply increased its exports of crude oil to China and outstripped Saudi Arabia in this indicator.

As a result, Moscow has become the largest supplier of energy raw materials to the Asian republic, as evidenced by the data of the Main Customs Administration of the PRC.

According to the agency’s calculations, in the last month of spring, Beijing purchased 8.4 million tons of Russian oil for a total amount of about $5.8 billion. Compared to the same period in 2021, imports grew by 55% in quantitative terms and by 124% in monetary terms.

It should be noted that the cost of Saudi oil supplied to Beijing increased by 81% and reached $6.3 billion. At the same time, the physical volume of sales increased only by 9%, to 7.8 million tons.

“The sharp increase in supplies is due to the fact that, on the one hand, demand for oil and other energy resources is recovering very quickly in China after the coronavirus pandemic.

On the other hand, Russia is willingly increasing the export of raw materials to China due to the sanctions of the West and the unpredictability of Europe as a consumer of hydrocarbons, ”Natalya Milchakova, a leading analyst at Freedom Finance IC, explained to RT.

Recall that since the end of winter, the European Union, the United States and a number of other states continue to impose economic sanctions against Russia.

This is how the West reacts to the special operation in Ukraine.

In total, more than 10.9 thousand restrictions have already been imposed on Moscow (8.2 thousand of them since February 22), as evidenced by the materials of the Castellum.AI global sanctions tracking database.

Restrictions, in particular, affected trade and the energy sector.

For example, the EU and the United States decided to stop importing Russian oil.

China, meanwhile, is showing increasing interest in purchasing energy resources from Moscow.

According to Natalia Milchakova, this is partly due to the provision of significant discounts to Beijing by the Russian side.

According to the World Bank, in May, Brent oil on the global market traded on average near $112.4 per barrel.

Meanwhile, the average price of Russian crude Urals was $87.5 per barrel, according to the materials of the Ministry of Finance.

“The fact is that Russia has a logistical advantage over Saudi Arabia (our main competitor in the Chinese market) in the form of the Eastern Siberia-Pacific Ocean oil pipeline system.

It allows Russia to supply oil at lower costs and offer a good discount for its raw materials to China,” Milchakova explained.

  • The end point of the pipeline system "Eastern Siberia - the Pacific Ocean" in the specialized offshore oil port of Kozmino in the Primorsky Territory

  • RIA News

  • © Svetlana Mayorova

In total, from January to May 2022, Russia exported more than 34 million tons of oil to China for almost $23 billion. As Yulia Melnikova, an analyst at Alfa Capital Management Company, suggested in an interview with RT, in the future the volume of deliveries will only grow.

“Russia will continue to redirect its oil to the East.

Of course, in terms of export volumes, there are still difficulties due to limited throughput.

However, Russian oil companies are likely to consider changing logistics and developing new infrastructure to increase supplies,” Melnikova said.

Natalya Milchakova also predicts an increase in oil exports from Russia to China in the coming months.

This will be facilitated by the proven reliability of Beijing as a trading partner of Moscow, the expert believes.

“Purchases of Russian oil will continue to grow not only because of the sanctions, but rather because of the growing demand and pragmatism of China.

Beijing cares about the well-being of its economy and people, therefore it puts the availability, quality and price of energy resources above ideological principles, unlike Europe,” the analyst added.

It is noteworthy that against the backdrop of unprecedented external pressure on Russia from the West, the Chinese authorities are still in favor of expanding all-round practical cooperation with Moscow.

This, in particular, was stated by Chinese President Xi Jinping in his address to the participants of the St. Petersburg International Economic Forum.

“Currently, cooperation between China and Russia in all areas is developing along an upward trajectory.

The trade turnover in the first five months of this year reached $65.8 billion. At the end of the year, one can count on new records.

This testifies to the high stress resistance and internal potential of Chinese-Russian cooperation,” the head of the Asian republic noted.

  • February 4, 2022.

    Russian President Vladimir Putin and Chinese President Xi Jinping (right) during a meeting at the Diaoyutai State Residence in Beijing

  • RIA News

  • © Alexey Druzhinin

In favor of the budget

Although today Moscow supplies raw materials to China and other Asian countries at a discount, Russia still has the opportunity to partially compensate for the losses from the Western embargo, Yulia Melnikova is sure.

In her opinion, under the current conditions, the country will be able to provide its budget with the necessary amount of income.

“Even with the discount, which often exceeds $30, Urals oil is trading at record levels.

Its average price at the end of the year will be clearly higher than last year's values, which will really allow to partially compensate for losses from reduced supplies to the West, ”Melnikova explained.

As previously calculated by the specialists of the Norwegian consulting company Rystad Energy, by the end of 2022, Russia can earn about $180 billion from the sale of oil. This is 45 and 181% more than in 2021 and 2020, respectively.

“In the structure of the Russian budget, oil and gas revenues account for more than 30%.

In the first months of this year, these revenues have doubled compared to the values ​​for the comparable period last year.

Against this background, even in the face of growing spending, we already have a significant budget surplus,” said Yulia Melnikova.

  • Gettyimages.ru

  • © Silas Stein /picture alliance

According to the Russian Ministry of Finance, in the first five months of 2022, the volume of cash receipts to the state treasury exceeded the amount of expenditures by about 1.5 trillion rubles.

According to Yulia Melnikova, the budget surplus will remain until the end of this year.

A similar point of view is shared by Nikolai Vavilov, a specialist in the department of strategic research at Total Research.

“The budget in 2022 can indeed be executed with a surplus.

Of course, the weakening of the national currency to the level of 70-80 rubles per dollar could additionally contribute to this.

With a surplus budget, the authorities will have additional funds to support low-income families, upgrade infrastructure, provide tax incentives and other business support.

So you need to follow the decisions of the government, ”concluded the interlocutor of RT.