Chinese state-owned oil companies have suspended purchases of Russian seaborne oil after the US imposed sanctions on Rosneft and Lukoil, Russia's two largest oil companies, Reuters reported on Thursday, citing numerous trading sources, writes UNN.
Details
The move comes as Indian refineries, the largest buyers of Russian seaborne oil, are set to sharply cut crude imports from Moscow in line with US sanctions imposed over the Kremlin's invasion of Ukraine, the publication writes.
The sharp drop in oil demand from Russia's two largest consumers will put a strain on Moscow's oil revenues and force leading global importers to seek alternative sources of supply and contribute to rising global prices, the publication indicates.
Chinese national oil companies PetroChina, Sinopec, CNOOC, and Zhenhua Oil will refrain from trading Russian seaborne oil, at least in the short term, due to fears of sanctions
China imports about 1.4 million barrels of Russian oil per day by sea, but most of it is purchased by independent refineries, including small companies known as "teapots," although estimates of purchases by state-owned refineries vary widely.
Vortexa Analytics estimates that Chinese state-owned companies' purchases of Russian oil will amount to less than 250,000 barrels per day in the first nine months of 2025, while consulting firm Energy Aspects estimates this figure at 500,000 barrels per day.
Unipec, Sinopec's trading arm, halted purchases of Russian oil last week after the UK sanctioned Rosneft and Lukoil, as well as "shadow fleet" vessels and Chinese companies, including a major Chinese refinery, two trading sources said.
UK authorities impose sanctions against Rosneft and Lukoil15.10.25, 15:34 • [views_3269]
Rosneft and Lukoil sell most of their oil to China through intermediaries, rather than dealing directly with buyers, traders said.
Independent refineries, in turn, are likely to suspend purchases to assess the impact of sanctions, but will still seek to continue buying Russian oil
Before the sanctions announcement on Wednesday, offers for ESPO crude for November delivery fell to a premium of $1 per barrel to ICE Brent, compared to previous deals in early October at a premium of $1.70.
China also imports about 900,000 barrels of Russian oil per day by pipeline, all of which goes to PetroChina, which, according to a number of traders, is unlikely to be affected by the sanctions.
India and China are expected to switch to other supplies, leading to higher prices for non-sanctioned oil from the Middle East, Africa, and Latin America
Oil prices rose by 3% after US sanctions against Rosneft and Lukoil23.10.25, 08:39 • [views_3565]