Chinese refiners are reducing their imports of Russian crude following expanded sanctions by the United States and its allies, which now target Russia’s major oil producers and associated trading firms, as reported by Bloomberg.
According to traders, Chinese state-owned energy companies Sinopec and PetroChina have scrapped multiple shipments of Russian oil after the U.S. imposed sanctions on Rosneft and Lukoil last month. Smaller independent refiners, referred to as ‘teapots,’ are halting purchases due to concerns over potential sanctions, following the recent blacklisting of China’s Shandong Yulong Petrochemical by the UK and EU.
The sanctions have dealt a significant blow to the ESPO crude grade, causing prices to tumble as demand from China—Russia’s largest customer—fell sharply. According to Bloomberg, Rystad Energy estimates that around 400,000 barrels per day, roughly 45% of China’s Russian oil imports, have been impacted by the reduction.
On October 22, the Trump administration introduced sanctions targeting major Russian oil firms Lukoil and Rosneft, seeking to push Moscow toward agreeing to a ceasefire in Ukraine.
As the world’s leading crude importer, China may shift its demand toward other suppliers, including the United States, following last week’s meeting between Presidents Donald Trump and Xi Jinping.
Meanwhile, China’s independent refiners are grappling with their own challenges, such as restricted import quotas and increased taxes, which have made it difficult to sustain processing levels and dampened demand for Russian oil.
Despite the sanctions, certain restricted refiners—including Yulong—have increased their reliance on Russian crude as Western suppliers withdraw. Earlier reports indicated that China’s Shandong Yulong Petrochemical significantly boosted its purchases of Russian oil following the UK’s decision to sanction the company earlier this month.
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