China’s private “teapot” refiners are facing double trouble. They are terrified of Western sanctions after the blacklisting of Yulong Petrochemical, and they are also running low on annual crude import quotas.
This combination is forcing them to shun Russian crude, contributing to a “buyers’ strike.” State-owned firms like Sinopec and PetroChina are also canceling cargoes due to new US sanctions on Rosneft and Lukoil.
The “strike” has been devastating for Moscow. Prices for its ESPO crude have plunged, and an estimated 400,000 barrels a day are affected, supporting the Western goal of cutting Russia’s war funding.
This turmoil is unfolding in a diplomatic void. A high-stakes Trump-Xi summit ended with a “muddle,” offering no public guidance on the critical oil issue.
As China looks for new supplies, the US could benefit from a new trade truce, but the quota issue will limit the teapots’ ability to participate.