As much as 45% of China’s oil imports from Russia are at risk from a new “buyers’ strike,” according to Rystad Energy AS. This pullout, affecting 400,000 barrels a day, is a direct response to escalating Western sanctions.
The strike is comprehensive. State-owned giants Sinopec and PetroChina Co. are on the sidelines, canceling orders. This follows new US sanctions on Russian producers Rosneft and Lukoil. Smaller, private “teapot” refiners are also in retreat, fearful of penalties.
The teapots’ fear is specifically linked to the recent blacklisting of Shandong Yulong Petrochemical Co. by the UK and EU. This move was seen as a clear warning. The resulting drop in demand has caused prices for Russia’s ESPO crude to collapse.
Russia had successfully cultivated China as its biggest foreign supplier, using heavy discounts to lure buyers after the Ukraine invasion. Now, the US and its allies are ratcheting up pressure on those buyers, seeking to choke off the oil revenues that fund Moscow’s war.
This retreat from Russian oil may benefit other suppliers, such as the US, especially after a recent trade truce between leaders Trump and Xi. However, the situation is complicated by the fact that many teapots are also running low on import quotas.