- Chinese oil refiners have bought Russian oil cargoes at steeper discounts than just weeks ago, according to Bloomberg.
- Those purchases were made in yuan rather than US dollars, and financed through local banks, per the report.
After a brief halt, Chinese oil refiners are buying Russian crude at even steeper discounts than just weeks ago, according to Bloomberg, and buyers are completing those purchases in yuan rather than US dollars.
Per the report, Chinese private processors, so-called teapots, purchased steeply discounted cargoes of Russian ESPO crude slated for December-January arrivals. Local banks and institutions also financed the yuan-based deals, Bloomberg said.
The purchases come ahead of the December 5 start date for a Russian oil price cap as well as the European Union's ban on seaborne Russian crude imports.
It remains to be seen whether these cargoes would be hit by sanctions or meet the parameters for the price cap, as it's unclear when the supplies would be loaded and unloaded. The Chinese buyers are also unconcerned because purchases were made on a delivered basis, meaning the responsibility of insurance and shipping is on the sellers, sources told Bloomberg.
The Treasury Department has said that ships with Russian crude loaded before December 5 and unloaded at their destination before January 19 wouldn't be subject to the price cap.
The final price of the Russian oil purchases won't be clear until a later date, as the deals are completed against Brent crude's front-month February contract, which only emerges at the end of December.
Meanwhile, talks among EU nations on the exact level of the price cap are ongoing. While EU leadership has proposed a price cap at $60 a barrel, the bloc still has to convince all its members to agree to it for it to take effect.
The EU has faced pushback by the likes of Poland, Estonia, and Lithuania, as each of those nations have instead called for a price cap of $30 a barrel.