China Increases Oil Production, Reduces Coal Consumption

In the first two months, China’s oil production rose 2.9% year-on-year to 35.11 million tons. To reduce consumption of coal, the most polluting fossil fuel compared to gas and liquid hydrocarbons, China increased oil imports by 5.1% during the period, purchasing 88.31 million tons of crude oil from foreign markets, mainly Russia and Arab countries. At the moment, the world’s second largest economy, which is very active in the development of renewable energy production, cannot completely abandon the use of coal, whose production in the period January-February 2024 nevertheless fell by 4.2% to 710 million tons.

Following a radical decision by the Chinese authorities to raise customs duties on coal imports, Russia cut coal exports to China by 22% in the first two months of the year, moving to second place after Indonesia in the list of major coal exporters.

China is increasing its oil imports from Russia, taking advantage of the temporary difficulties Russian companies are facing in the Indian market. Due to sanctions imposed by the USA against Russian shipowner Sovcomflot (SCF) and its 14 oil tankers, Indian refineries have stopped buying crude oil transported by Russian supertankers. Among the refiners that have stopped doing business with Russia are state-owned Indian Oil and private Reliance Industries, whose market capitalization reached $236.4 billion in March 2024 (+27.05% in 2023). Despite Western sanctions, Russia manages to export up to 1.8 million bpd of oil to India, which, according to KPLER agency estimates, represents the highest volume since July 2023.