The US and its allies are successfully squeezing Moscow’s war chest by targeting its oil sales in China. New sanctions have triggered a “buyers’ strike” among Chinese refiners, choking off a critical revenue stream for Russia.
The campaign includes US sanctions on producers Rosneft and Lukoil, and UK/EU sanctions on a Chinese customer, Yulong Petrochemical. This has scared both state-owned giants like Sinopec and PetroChina, and private “teapot” refiners, into canceling Russian cargoes.
The impact is substantial. Rystad Energy AS estimates 400,000 barrels a day are affected, or as much as 45% of China’s Russian oil imports. This has caused prices for Russian ESPO crude to plunge.
Russia had previously cemented itself as China’s top supplier by offering deep discounts after the Ukraine invasion. Now, that lifeline is being cut by a concerted Western effort to defund the war.
As China, the world’s biggest crude importer, pivots away from Russia, other suppliers like the US stand to gain. A recent trade truce between leaders Trump and Xi could pave the way, although the summit was silent on this specific issue, leaving the market in a muddle.