New Western sanctions are succeeding in paralyzing the flow of Russian oil to China. The US has targeted Russian producers Rosneft and Lukoil, while the UK/EU blacklisting of Yulong Petrochemical has terrified private refiners.
The effect is a market in retreat. China’s state-owned refiners, including Sinopec and PetroChina, are canceling Russian cargoes to avoid penalties. Private “teapot” refiners are also shunning Russian supplies, fearing they could be next.
This “buyers’ strike” has hit Moscow’s wallet hard. Prices for its key ESPO crude grade have plunged, and estimates suggest 400,000 barrels per day are affected, directly supporting the Western goal of cutting Russia’s war funding.
This is all happening against a backdrop of diplomatic uncertainty. A recent high-stakes summit between Donald Trump and Xi Jinping concluded with no public clarity on the oil issue, leaving refiners guessing.
Domestic issues in China are also a factor. Many of the “teapot” refiners are reportedly low on their yearly crude import quotas, which would limit their ability to purchase Russian oil for the rest of the year.