New Western sanctions are proving effective, as both China’s “teapot” refiners and its state-owned giants are ditching Russian crude. The fear of being blacklisted is outweighing the allure of discounted oil.
The pullback is led by Sinopec and PetroChina, who are canceling cargoes after the US sanctioned Russian producers Rosneft and Lukoil. But the real panic is in the private sector. The UK/EU blacklisting of Shandong Yulong Petrochemical Co. has served as a powerful warning to other teapots.
The result is a “buyers’ strike” that has cratered prices for Russian ESPO crude. Rystad Energy AS estimates that 400,000 barrels a day of trade are affected, a massive 45% of China’s imports from Russia.
This is a significant setback for Moscow, which had successfully pivoted to China after the Ukraine invasion, making it its top customer. The US and its allies are now ratcheting up the pressure, aiming to cut off this vital revenue stream.
As China, the world’s top importer, looks elsewhere, other suppliers like the US stand to gain. However, the situation is complicated by the fact that many teapots are also running low on import quotas, a domestic issue that further curbs their buying power.
