A “buyers’ strike” from China is dealing a heavy blow to Russian oil, fulfilling a key Western policy goal. The sudden drop in demand has caused ESPO crude prices to plunge, impacting an estimated 400,000 barrels a day.
The strike is being led by China’s largest state-owned firms, Sinopec and PetroChina, which are canceling Russian cargoes. This is a direct response to new US sanctions on producers Rosneft and Lukoil.
The fear is just as strong in the private sector. “Teapot” refiners are shunning Russian crude, terrified by the UK/EU blacklisting of Yulong Petrochemical.
This is all happening at a time of maximum uncertainty. A high-stakes summit between Donald Trump and Xi Jinping was silent on the oil issue, leaving refiners in a “muddle.”
As China looks for new supplies, the US could benefit. However, the lack of clarity from the summit remains a significant problem.