Fear of Western sanctions has gripped China’s oil market, causing both state-owned and private refiners to shun Russian crude. State giants Sinopec and PetroChina are canceling cargoes following new US sanctions on Rosneft and Lukoil.
The blacklisting of Yulong Petrochemical by the UK/EU has sent a shockwave through the private sector. “Teapot” refiners, terrified of a similar fate, are steering clear of Russian supplies.
This “buyers’ strike” by the world’s top importer is having a massive impact. ESPO crude prices have plunged, dealing a financial blow to Moscow and affecting an estimated 400,000 barrels of oil per day.
The retreat comes amid confusion following a Trump-Xi summit. The leaders’ public readouts were silent on the oil issue, leaving refiners in a “muddle” without clear political guidance.
As China looks for new supplies, the US could benefit from a new trade truce. However, many “teapots” are also low on import quotas, a domestic issue that further complicates the trade map.
