Domestic Quota Shortage Adds to China’s Oil “Muddle”

A domestic shortage of crude import quotas for “teapot” refiners is adding another layer of complexity to China’s oil “muddle.” This will limit their ability to buy Russian oil for the rest of the year, independent of any sanctions.
This comes as refiners are already in retreat. State-owned Sinopec and PetroChina are canceling Russian cargoes due to new US sanctions on Rosneft and Lukoil.
Private teapots are also shunning Russian crude, terrified by the UK/EU blacklisting of Yulong Petrochemical.
This “buyers’ strike” has been effective, causing ESPO crude prices to plunge and hitting Moscow’s finances.
The entire situation is shrouded in uncertainty following a Trump-Xi summit. The leaders’ silence on the critical oil issue has left the market guessing.