China is snapping up Russian oil at the steepest discount in months as EU scrambles to keep a lid on Moscow's energy income

• China is purchasing Russian crude at the steepest discounts in months, Reuters reported.
• Four traders familiar with the matter said at least one refinery purchased crude for as low as $68 a barrel.

As the European Union scrambles to keep a lid on Moscow's energy income, China is snapping up Russian oil at the steepest discount in months, traders familiar with the matter told Reuters on Wednesday.

At least one December-arrival cargo Russian ESPO light crude was sold at a discount of up to $6 per barrel compared to the benchmark price for Brent, four traders told the news outlet, implying a price of $68 a barrel.

And some January-loading cargoes were sold at a $4-per-barrel discount, the most since July, according to Reuters.

While China has said it won't abide by the price cap on Russian oil that the G7 and EU imposed, it could give Moscow's customers more bargaining power in oil deals, according to analysts from Rystad Energy in a recent note.

But for now, sources told Reuters that China-Russia oil traders were doing business as usual.

The steeper discounts are coming amid fears about Chinese demand as strict zero-COVID policies have curbed economic activity, though Beijing has signaled some loosening. Reuters also reported that Chinese refiners are seeing weaker margins.

"They don't really care about the price cap. All they do is crunch the numbers to see if the delivered prices make good profit or not," one executive at a refinery told the news outlet.

Russia has rejected the price cap and threatened to retaliate against the measure, such as by slashing its crude supplies to participating countries, implementing a price floor, or enforcing maximum discounts on its crude.

But Vanda Insights has said the cap is unlikely to make a meaningful impact on Russia's profits.