An estimated 400,000 barrels of Russian oil per day are in limbo after a “buyers’ strike” by Chinese refiners has jolted Moscow’s energy trade. This volume, which Rystad Energy AS suggests could be 45% of China’s Russian imports, is being shunned due to new Western sanctions.
China’s largest refiners, Sinopec and PetroChina, are avoiding Russian cargoes. This follows the US blacklisting of Russian producers Rosneft and Lukoil. The fear is that any firm dealing with them could be next in line for penalties.
This anxiety is especially high among “teapot” refiners. The UK/EU blacklisting of Shandong Yulong Petrochemical Co. has acted as a potent warning, causing many private refiners to halt purchases. The result has been a collapse in the price of Russian ESPO crude.
Russia’s position as China’s top supplier, which it won through heavy post-invasion discounts, is now at risk. The US and its allies are clearly escalating their economic campaign, aiming to cut off Moscow’s oil revenues and weaken its war effort.
As China, the world’s top crude importer, shuns its neighbor, it will create a supply gap. This could be an opportunity for other producers, including the US, which recently settled a trade truce with Beijing. Meanwhile, the blacklisted Yulong is ironically buying more Russian oil, as it has no other options.
400,000 Barrels in Limbo: Chinese Buyers’ Strike Jolts Russia
