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The fall in Russian oil prices affected sharply increased supplies to China: Chinese oil refiners bought more than 1 million tons of Russian oil. This is due to the beginning of the recovery of economic activity in China, as well as the decline in raw material prices: due to oversupply at the end of March, Russian raw materials of the Urals brand fell in price below $17, which was cheaper than the price of North American WTI. The increased demand for fuel in China may become a key success factor for Russian oil companies in the price war on the world market.
China's decline in oil purchases at the beginning of the year was affected by the quarantine: traffic decreased and enterprises stopped working, which led to a decrease in the consumption of petroleum products.
A number of support measures have been taken to support the economy in China: taxes were reduced, interest rates on loans were reduced, the People's Bank of China provided additional liquidity of 1.2 trillion yuan (more than $170 billion), and local governments were allowed to issue targeted bonds for infrastructure projects.
As a result of the measures taken, the official purchasing managers' index rose to 52.0 in March (compared with a record low of 35.7 in February). An indicator of more than 50 shows an increase in economic activity. The index in production increased from 27.8 to 54.1, in new export orders – from 28.7 to 46.4.
Businesses that have started up again after forced downtime require electricity and fuel to transport raw materials and finished products, which affects the growth of energy imports. Growth may continue due to the fact that China plans to eliminate subsidies for solar and wind power plants as part of optimizing budget spending.
Despite the agreement between China and the United States on the first delivery of liquefied gas, the main volume of energy comes to China from Russia.
According to oil traders, China's refineries bought 10-12 loads of Russian Urals oil in March. In February of this year, Russia delivered 540,000 tons of oil to China, in March this figure was already 700,000 tons, and in April, Russian companies will send 1 million tons of oil to China.