Russian President Vladimir Putin is facing challenges as Chinese Yanchang Petroleum, a provincial government-backed oil refiner, has suspended its purchases of Russian crude following American sanctions on the country’s top oil producers.
Usually importing one monthly shipment, Yanchang has been a steady purchaser of Russian oil, mostly the Far East export-grade ESPO blend or Sokol, one of the added traders according to Reuters.
Role of Yanchang in Russian Oil Imports
The Shaanxi-based refinery has historically been a regular buyer of Russian crude, typically taking one shipment per month, usually ESPO or Sokol grades, according to traders familiar with the matter.
With a processing capacity of 348,000 barrels per day, Yanchang is one of the largest inland refineries in China.
It holds an annual import quota of 3.6 million metric tons, equivalent to 26 million barrels. The refinery typically receives imported crude oil at Tianjin Port, near Beijing, and transports it by rail to Shaanxi.
The halt in purchases is negatively affecting Russia, which relies heavily on China and India as its top oil export markets.
Impact of U.S. Sanctions
This pause follows sanctions imposed by the United States on October 22, targeting Russia’s two largest oil companies, Rosneft and Lukoil, as well as several of their subsidiaries.
The measures were introduced to pressure Moscow into agreeing to an immediate ceasefire.
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Reuters previously reported that several other major Chinese oil firms, including PetroChina, Sinopec, CNOOC, and Zhenhua Oil, also began avoiding Russian crude following the sanctions.
Companies cited concerns about secondary sanctions as the reason for avoiding Russian imports.
These sanctions, along with geopolitical uncertainty, are prompting a change in trading patterns and forcing buyers like Yanchang to reconsider their Russian oil agreements.
China and Russia Pledge Joint Response to Unilateral Sanctions
On November 4, China and Russia committed to a joint response against unilateral sanctions during a visit by Russia’s Prime Minister.
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Chinese President Xi Jinping confirmed that Beijing is dedicated to strengthening ties with Moscow despite “turbulent” international conditions.
According to a joint communique released by China’s foreign ministry following a meeting between Chinese Premier Li Qiang and Russian Prime Minister Mikhail Mishustin, both countries pledged to take “all necessary measures to provide mutual assistance and cooperate in opposing unilateral coercive measures.”
The statement added that any unilateral sanctions imposed by individual countries or groups that bypass UN Security Council resolutions are considered illegal and cannot be accepted or recognised.
Both China and Russia hold permanent seats on the UN Security Council, giving them the power to veto resolutions.
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