Prices for Russian crude have tanked after China’s state-owned refining giants, Sinopec and PetroChina Co., fled the market. The companies are canceling Russian cargoes, wary of new US sanctions aimed at Moscow’s top energy producers, Rosneft and Lukoil.
This retreat by the state giants is mirrored by smaller, private “teapot” refiners. They are holding off on purchases, frightened by the recent blacklisting of a fellow refiner, Shandong Yulong Petrochemical Co., by the UK and EU. This has created a widespread “buyers’ strike.”
The strike’s impact is significant, affecting an estimated 400,000 barrels a day, according to Rystad Energy AS. This volume accounts for as much as 45% of China’s total oil imports from Russia, which had become its biggest supplier due to heavy post-invasion discounts.
The US and its allies are now ratcheting up sanctions, targeting not just producers but also their customers, in a bid to stop the war by choking off Moscow’s oil revenues. This is forcing a realignment of global energy flows.
As China, the world’s biggest crude importer, shuns its neighbor, it will need to source oil elsewhere. This could benefit other suppliers, including the US, which just agreed a trade truce with Beijing. In a strange twist, the blacklisted Yulong is now buying more Russian oil, having been cut off from other suppliers.
