Russia is reeling as new Western sanctions have effectively wiped out up to 45% of its market share in China, its biggest customer. A “buyers’ strike” has hit 400,000 barrels a day of trade, according to Rystad Energy AS.
The pullback is comprehensive. State-owned firms Sinopec and PetroChina are avoiding Russian cargoes following US sanctions on Rosneft and Lukoil. Private “teapot” refiners are also in retreat, spooked by the UK/EU blacklisting of a fellow Chinese firm, Yulong Petrochemical.
This has caused prices for Russian crude, like the ESPO grade, to plunge. Russia had become China’s top supplier by offering steep discounts after the Ukraine invasion, a strategy the West is now successfully dismantling.
The US and its allies are ratcheting up pressure, targeting customers to cut off Moscow’s oil revenues. This is a key part of their strategy to stop the war in Ukraine.
As China, the world’s top crude importer, shuns its neighbor, it will be forced to source oil elsewhere. The US, following a recent trade truce between leaders Trump and Xi, could be a major beneficiary. The summit, however, was silent on Russian oil, adding to the market’s muddle.