Chinese state firms, including Sinopec and Zhenhua Oil, have cut Russian oil imports due to sanctions concerns. PetroChina and CNOOC are also reducing their purchase volumes. Independent refiners are compensating for these cutbacks, although overall purchases reflect the geopolitical complexities surrounding the Russia-Ukraine conflict.

Chinese state-owned oil companies are significantly reducing their imports of Russian oil this month due to concerns regarding compliance with U.S. sanctions. Two major importers, Sinopec and Zhenhua Oil, have completely halted their purchases, while PetroChina and CNOOC are also scaling back the volumes of Russian oil they are acquiring. These actions reflect ongoing assessments of the sanctions since the implementation of restrictions against Russian producers such as Gazprom Neft and Surgutneftegaz.

While shipments of Russian oil to China had previously rebounded, the recent sanctions imposed by the U.S. have prompted Chinese state firms to exercise caution. The decrease in purchases has adversely affected Russian oil prices, further constraining Moscow’s revenue as discussions regarding a potential ceasefire in Ukraine loom. A source cited that the halt in deals is part of ongoing compliance checks until there is clarity on U.S.-Russia negotiations.

Independent refiners have emerged to fill the void left by the state firms, thereby maintaining support for prices on Russia’s ESPO blend oil. Market experts suggest that these refineries are paying a premium for March-loading cargoes, despite a general atmosphere of caution surrounding Russian oil trade. China has historically been a significant purchaser of Russian oil, accounting for approximately half of Russia’s total shipments to the country.

Despite cutting back on volumes, PetroChina remains engaged in seaborne purchases, albeit at reduced quantities, while CNOOC has also diminished its volume of imports. Simultaneously, Sinopec has started supplementing the decline in Russian imports by sourcing from West Africa, the Middle East, and Brazil, demonstrating the adaptability of Chinese firms amidst changing geopolitical dynamics.

In summary, Chinese state-owned oil companies are increasingly cautious in their dealings with Russian oil due to recent U.S. sanctions, resulting in both halted and reduced purchases. This has resulted in a decline in Russian oil prices and affects Moscow’s revenue during a critical period marked by international tension. Nevertheless, independent refiners have stepped in to sustain market stability, while major state firms are seeking alternatives to maintain their supply chains.

Original Source: www.hindustantimes.com

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