China faces oil challenge as prices soar and supply options narrow
Beijing is drawing on vast reserves and seeking alternative crude as shipping disruption continues.
Oil prices in China have surged to record highs amid mounting disruptions to exports from the Middle East, as Beijing faces an increasingly difficult balancing act between securing its own energy supplies and preventing global oil prices from climbing even higher.
Saudi Arabia has been forced to shut a key pipeline that had become an important route for getting oil to China and other Asian markets while disruption in the Strait of Hormuz restricted exports through the Gulf. The pipeline, which carries crude across the Arabian Peninsula to the Red Sea, was shut following attacks by an Iran-backed group in Iraq.
Its closure leaves two vital routes for Middle Eastern oil to China both disrupted in the midst of the US-Israel war on Iran and conflicts in the wider region. With access to Russian and Iranian crude also complicated by United States sanctions and other restrictions, Chinese refiners are being forced to search further afield for supplies. That scramble for available barrels is adding to pressure on oil prices, both in China and globally.
US sanctions have complicated those purchases, but not stopped them. China’s seaborne imports from Russia reached 1.68 million barrels per day in August, up from 1.4 million in July and the highest since March, according to Kpler data. China also receives about one million barrels per day of Russian crude through pipelines.