China will not give up Russian oil if the US imposes secondary tariffs on countries that buy Russian crude oil, experts believe. According to them, US President Donald Trump's statement on these tariffs will not affect the market and the size of the discount for Russian oil until September.
“Given the already high level of imposed tariffs and its general geopolitical situation, China will most likely try to maintain the maximum current volumes of Russian imports“, said Alexey Belogoryev, research director at the Institute of Energy and Finance.
“In our opinion, China, which is already in a state of continuous trade war with the US, is unlikely to react in any way to threats or sanctions from the US“, they noted.
For the vast majority of other buyers of Russian energy resources, trade relations with the US are more important or comparable in importance to imports of Russian hydrocarbons. “This means that if Trump's warnings turn out to be more than just threats, then the decline in Russian oil and oil product exports could be double-digit, and the discount could rise again to the levels of late 2022,“ analysts believe.
In general, experts are of the opinion that the introduction of tariffs is unlikely. “Such strict secondary sanctions still seem unlikely, as evidenced by the relatively calm state of both the Russian stock market and the global oil market,“ they point out. In recent months, investors have become less responsive to Trump's statements, as they often turn out to be bluffs. “The sensitivity of the US to changes in oil prices, in our opinion, further reduces the likelihood of strict sanctions against the Russian oil industry“, he added.
Belogorye does not yet expect the impact of possible tariffs on the market. “In any case, by September I do not think there will be any impact on the market, including on freight rates or on the prices of Russian brands“, they emphasize.