This chart explains why Moscow could turn to China to ramp up oil imports after an EU embargo

• China's capacity to store oil and history of buying discounted supplies could help Moscow offset an EU embargo.
• China has at least 83 million barrels of spare inventory capacity that could be filled with cheap Russian oil, said energy analyst Matt Smith.

China's capacity to store oil and history of buying discounted supplies could help Moscow offset the impact of a European Union embargo of Russian crude, according to an energy analyst.

When oil prices plunged early in the pandemic, Beijing snapped up crude and built up a vast stockpile of onshore reserves as demand cratered, Matt Smith, lead oil analyst at Kpler, told Insider

Then, as oil prices rebounded, China drew down those inventories from the peak in September 2020 to March 2022 rather than buying crude in the open market, he said.

Since China re-imposed strict lockdowns this spring to stem a resurgence of COVID-19 cases, weak demand has pushed oil inventories back up a bit. Still, China has at least 83 million barrels of spare inventory capacity that could be filled with Russian oil made cheap by an EU embargo, Smith estimated.

"The leveling off of inventories at 870 million barrels seems to signal a floor — China is unwilling to draw down their stocks any further — and an apparent willingness to restock if prices are attractive," he said.