A cascade of Western sanctions has triggered a full-scale retreat by Chinese refiners from the Russian oil market. US sanctions on Rosneft and Lukoil, coupled with the UK/EU blacklisting of Yulong Petrochemical, have proven effective.
State-owned firms Sinopec and PetroChina are now canceling Russian cargoes. Private “teapot” refiners, spooked by the Yulong case, are also shunning the trade.
This “buyers’ strike” has inflicted immediate financial pain on Moscow. Prices for its ESPO crude have plummeted, and an estimated 400,000 barrels per day of trade are impacted.
The market is navigating this crisis without political cover. A recent Trump-Xi summit was silent on the oil issue, creating a “muddle” and leaving refiners to guess at the official stance.
This uncertainty comes as China, the world’s top importer, looks for new supplies. While the US could benefit, many Chinese refiners are also hampered by shrinking import quotas.
