Chinese oil refiners are spooked. A recent, high-stakes meeting between Donald Trump and Xi Jinping produced no public guidance on the critical issue of Russian oil, creating a “muddle” at a time of maximum uncertainty.
This silence has left the world’s top oil importer guessing. As China seeks new supplies, the US could stand to benefit from a new trade truce, but the lack of clarity from the summit is a significant obstacle.
The uncertainty is amplified by a raft of new sanctions. The US has targeted Rosneft and Lukoil, while the UK/EU blacklisting of Yulong Petrochemical has sent a chill through private “teapot” refiners.
This has led to a market in retreat. State-owned firms Sinopec and PetroChina are canceling Russian cargoes, and the teapots are shunning the trade altogether, terrified of being next.
The impact on Russia has been immediate. This “buyers’ strike” has caused ESPO crude prices to plunge, cutting off a key source of funding for Moscow.