China Halts Russian Oil Purchases Amid Sanctions, Sources Reveal
Chinese state-owned oil companies have halted imports of Russian crude oil due to recent U.S. sanctions targeting significant players in the Russian energy sector. The sanctions were imposed on Rosneft and Lukoil, Russia’s two largest oil companies, and have prompted major changes in oil trading dynamics.
Impact of Sanctions on Russian Oil Exports
The U.S. sanctions are expected to create significant disruptions in the global oil market. With China and India being the primary importers of Russian oil, their reduced demand will have profound implications for Russia’s oil revenues.
China’s Suspension of Seaborne Russian Oil Purchases
- Chinese oil majors, including PetroChina, Sinopec, CNOOC, and Zhenhua Oil, have temporarily ceased the purchase of seaborne Russian oil.
- Estimates suggest China imports roughly 1.4 million barrels of Russian oil per day by sea.
- However, state-owned refiners are believed to buy much less, with estimates varying between 250,000 to 500,000 barrels per day.
- Independent refiners in China may still look to continue purchases but are pausing to evaluate the sanctions’ implications.
Effects on Indian Oil Imports
Alongside China, India is also poised to significantly reduce its crude oil imports from Russia. This shift is a direct response to U.S. sanctions enacted following Russia’s invasion of Ukraine.
Market Repercussions and Future Outlook
The suspension of purchases from China and the expected decline in Indian imports will strain Russia’s oil revenues. Global market dynamics are likely to shift, with the world’s top importers needing to find alternatives.
- In response to diminished supplies from Russia, prices for non-sanctioned oil from the Middle East, Africa, and Latin America may rise.
- Prior to the sanctions announcement, the price of November-loading ESPO crude had already seen a decline in its premium over Brent crude.
As the situation develops, market participants will closely monitor changes in oil supply chains and pricing structures influenced by these sanctions.
