China’s refiners, led by state-owned Sinopec and private “teapots,” are engaged in a “buyers’ strike” against Russian crude. This retreat is a direct response to a frightening new wave of Western sanctions.
Sinopec and PetroChina are canceling cargoes as the US sanctions producers Rosneft and Lukoil. Simultaneously, the teapots are shunning Russian oil, terrified after the UK/EU blacklisted Yulong Petrochemical.
The impact on Moscow has been severe. This drop in demand from the world’s top importer has caused ESPO crude prices to plunge, affecting an estimated 400,000 barrels a day and cutting into Russia’s war funding.
This is all happening in a political vacuum. A high-stakes summit between Donald Trump and Xi Jinping ended with no public statement on oil, creating a “muddle” for the market.
An additional domestic problem looms, as many teapot refiners are running low on annual crude import quotas, limiting their ability to pivot to other suppliers even if they wanted to.