China’s state-owned oil giants, Sinopec and PetroChina Co., are saying “no thanks” to Russian oil. The firms are canceling cargoes and staying on the sidelines, signaling a major policy shift driven by the fear of new US sanctions.
The US recently blacklisted Russian producers Rosneft and Lukoil, making any dealings with them toxic. This move was followed by UK/EU sanctions on a Chinese refiner, Shandong Yulong Petrochemical Co., which has terrified the smaller “teapot” refiners, who are also halting purchases.
This widespread “buyers’ strike” has crushed demand for Russian crude, causing prices for the ESPO grade to plunge. Rystad Energy AS estimates that 400,000 barrels a day, or nearly half of China’s Russian imports, are affected.
Russia’s strategy of becoming China’s top supplier through heavy discounts is now faltering. The US and its allies are deliberately targeting this trade to cut off Moscow’s oil revenues and pressure it to end the war in Ukraine.
As China, the world’s biggest crude importer, looks for new supplies, the US could be a beneficiary. A recent trade truce between leaders Trump and Xi has opened the door, although the summit was notably silent on the Russian oil issue, adding to market confusion.