An energy analyst says that 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.
Matt Smith, lead oil analyst at Kpler, said that Beijing built up a huge amount of reserves when oil prices plunged.
After oil prices rebounded, China stopped buying crude in the open market and instead drew down inventories from the peak in September 2020.
Weak demand has pushed oil inventories back up a bit since China re-imposed strict lockdowns to stem a resurgence of COVID-19 cases. Smith estimated that China has at least 83 million barrels of spare inventory capacity that could be filled with Russian oil made cheap by an EU embargo.
The leveling off of inventories at 870 million barrels seems to signal a floor and China is unwilling to draw down their stocks any further.
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