Despite the smaller discounts, Russia remains China's largest crude oil supplier.

Data from the General Administration of Customs of China shows that in July, China's imports of crude oil from Russia increased by 13% compared to the same period last year, reaching 8.06 million tons, or 1.9 million barrels per day. In the first seven months of this year, crude oil imports from Russia increased by 25% compared to the same period last year, totaling 60.66 million tons. Meanwhile, crude oil imports from Saudi Arabia in July amounted to 5.65 million tons, a 14% decrease year-on-year and a 31% decrease from June.

Despite the smaller discounts on Russian crude oil exports and the rise in domestic demand limiting the scale of Russia's crude oil exports, the latest data released by China indicates that Russia remains China's largest supplier of crude oil in July.

Additionally, market participants have fully anticipated the decline in Saudi crude oil exports. This is because, on one hand, Saudi Arabia expanded its oil production cuts, reducing its output from 9.96 million barrels/day in June to 9 million barrels/day. On the other hand, the Saudi government raised the official selling price of Arab Light crude oil to Asian buyers to a six-month high in July. These two factors have not only suppressed the demand for crude oil in Asian countries but also limited the scale of Saudi crude oil exports.

Even though the West continues to impose sanctions on Russia and implement a price cap on Russian exports, the strong demand from buyers in India and China is eroding the discounts caused by the sanctions, making the trading price of Russian ESPO-grade crude oil increasingly close to the benchmark grades. According to trade sources, the price of ESPO crude oil delivered in July was discounted by $5-$6 per barrel compared to the ICE Brent benchmark crude oil, whereas the price for oil delivered in March was discounted by $8.50 per barrel compared to the ICE Brent benchmark crude oil.

Apart from the reduced discounts dragging down oil exports, Russia's robust domestic demand is also a key factor leading to a decrease in its overall export volumes. It is estimated that crude oil shipments from Russia's western ports decreased by 18% month-on-month in July, reflecting the country's recovering demand for domestic refining.

As the export volumes of major oil-producing countries such as Saudi Arabia and Russia decline, China and other major Asian countries have seen growth in their shares from alternative suppliers. For example, Angola's crude oil exports in July increased by 27% compared to the previous month, reaching 574,581 barrels/day. Exports from Malaysia in July increased by 16% year-on-year, reaching 911,926 barrels/day. Malaysia is often used as a transit point for oil exports from sanctioned countries like Iran and Venezuela.

Moreover, the increase in United States export volumes is also compensating for the supply gap caused by Saudi Arabia and Russia. Although geopolitical tensions remain tight in some regions, under the influence of Opec+ oil supply cuts, the U.S.'s crude oil exports to China have increased five-fold compared to the same period last year, reaching 161,275 barrels/day.

Below are the trade data with trade volumes and year-on-year percentage changes compiled by Reuters (unit: million tons).