The blacklisting of Yulong Petrochemical has sent a “terrifying” message to China’s private “teapot” refiners, who are now shunning Russian crude. This move, combined with US sanctions on Rosneft and Lukoil, is crippling the Russia-China oil trade.
Even state-owned giants Sinopec and PetroChina are in retreat, canceling Russian cargoes in response to the new US measures.
This “buyers’ strike” has hit Moscow’s finances hard. Prices for ESPO crude have plunged as demand from the world’s top importer evaporates, impacting an estimated 400,000 barrels daily.
This is all happening at a time of maximum uncertainty. A recent Trump-Xi summit left refiners guessing, as the leaders’ readouts were silent on the critical oil issue.
The situation is further complicated by domestic issues. Many teapots are running low on crude import quotas, limiting their ability to buy Russian oil even if they were willing to risk the sanctions.