A high-stakes summit between Donald Trump and Xi Jinping has left Chinese refiners guessing, as the leaders’ public readouts were silent on the critical issue of Russian oil. This “muddle” comes at a time of maximum uncertainty for the market.
Refiners are already in retreat. State-owned Sinopec and PetroChina are canceling Russian cargoes, reacting to new US sanctions on producers Rosneft and Lukoil. Private “teapot” refiners are also shunning Russian crude, terrified by the UK/EU blacklisting of Yulong Petrochemical.
This “buyers’ strike” has hit Moscow hard, causing ESPO crude prices to plunge and affecting an estimated 400,000 barrels a day. This is a clear goal of Western policy, which aims to cut off Russia’s war funding.
As China, the world’s top importer, looks for new supplies, the US could benefit from the new trade truce. However, the lack of clarity from the summit is a problem.
The situation is further complicated by domestic issues. Many teapots are running low on crude import quotas, a problem that will limit their ability to buy Russian oil for the rest of the year, even if they were willing to risk the sanctions.