Chinese refiners are in retreat, canceling Russian cargoes amidst a confusing silence from their own leadership. Following a summit between Donald Trump and Xi Jinping, public readouts were void of any mention of Russian oil, leaving the market guessing.
This “muddle” comes as Western sanctions escalate. The US has targeted Russian producers Rosneft and Lukoil, directly impacting the decisions of state-owned giants like Sinopec and PetroChina, who are now canceling shipments.
Private “teapot” refiners are also running scared. The blacklisting of Yulong Petrochemical by the UK and EU has terrified this segment of the market, leading them to shun Russian crude.
This combined “buyers’ strike” has dealt a significant blow to Moscow, a clear objective of Western policy. The price for ESPO crude has plummeted, and an estimated 400,000 barrels a day are affected.
The situation is further complicated by a domestic issue: many teapot refiners are running low on annual crude import quotas, limiting their ability to buy from anyone, let alone Russia.