Even if they dared to risk Western sanctions, many of China’s “teapot” refiners can’t buy Russian oil. A domestic quota crunch means they are running low on crude import allocations for the rest of the year.
This problem coincides with a “buyers’ strike” driven by fear. Teapots are shunning Russian crude, terrified by the UK/EU blacklisting of Yulong Petrochemical. State-owned firms are also canceling cargoes due to US sanctions.
The impact on Russia is severe, with ESPO crude prices plunging and 400,000 barrels a day of trade flow affected.
This is all happening in a “muddle” created by a Trump-Xi summit. The leaders’ silence on the oil issue has left the market in a state of maximum uncertainty.
As China, the world’s top importer, looks for new supplies, this combination of sanctions, fear, and domestic quotas has paralyzed the market.