Sanctions Fear Grips China’s Oil Market

Fear of sanctions has gripped China’s oil market. State-owned firms are canceling Russian cargoes, and private “teapots” are shunning them, creating a “buyers’ strike.”
This retreat is a direct response to new Western actions. The US has sanctioned Russian producers Rosneft and Lukoil, while the UK/EU blacklisting of Yulong Petrochemical has terrified the private sector.
The impact on Russia has been profound, supporting a key Western policy goal. ESPO crude prices have plunged, and an estimated 400,000 barrels a day of trade are affected.
The market uncertainty is compounded by a “muddle” at the diplomatic level. A recent summit between Donald Trump and Xi Jinping provided no clarity on the Russian oil issue.
As China looks for new supplies, the US could benefit from a new trade truce. However, many teapots are also running low on import quotas, adding another layer of complexity.