ESPO Crude Price Collapses as China Shuns Moscow

The price of Russia’s key ESPO crude has collapsed as China, its most important customer, shuns its supplies. This retreat is driven by fear of a new, more aggressive round of Western sanctions.
Chinese state-owned giants, Sinopec and PetroChina, are canceling Russian cargoes. This follows US sanctions on Russian producers Rosneft and Lukoil. The risk was further highlighted when the UK and EU blacklisted a Chinese refiner, Shandong Yulong Petrochemical Co.
This move against a Chinese buyer has terrified the “teapot” refiners, the smaller private firms. They are now holding off on purchases, creating a “buyers’ strike” that Rystad Energy AS estimates at 400,000 barrels a day. This volume represents up to 45% of China’s Russian oil imports.
Russia’s post-Ukraine strategy of selling discounted oil to China is now under severe threat. The US and its allies are escalating their campaign to choke off Moscow’s oil revenues, a key source of funding for the war.
As China, the world’s biggest crude importer, looks for new supplies, other nations may benefit. This includes the US, which just agreed a trade truce with Beijing. In a strange twist, the blacklisted Yulong is now buying more Russian oil, as it has no other options.