China’s oil refiners have hit the pause button on Russian crude. In a significant market shift, state-owned firms Sinopec and PetroChina are canceling Russian cargoes, and private “teapot” refiners are shunning supplies.
This “buyers’ strike” is driven by fear. New US sanctions on Rosneft and Lukoil have made state firms wary. The UK/EU blacklisting of Yulong Petrochemical has terrified the private sector.
The consequences for Russia are clear. ESPO crude prices have plunged, and an estimated 400,000 barrels a day of oil flow are impacted. This directly supports the Western policy goal of choking off Moscow’s funding.
The market is also grappling with diplomatic uncertainty. A recent Trump-Xi summit was silent on the oil issue, leaving refiners in a “muddle.”
As China looks for new supplies, the US could benefit from a new trade truce. However, the lack of clarity from the summit and domestic quota issues for teapots are clouding the future.