Russia-to-China Oil Flows Slow as Sanctions Pressure Mounts.

Russia-to-China Oil Flows Slow as Sanctions Pressure Mounts. Expanding U.S. and European sanctions are significantly disrupting the flow of Russian and Iranian crude oil into China, the world’s largest importer, creating an unusual level of caution among major Chinese refining companies. Although new workarounds are beginning to surface, analysts say the current slowdown could reshape short-term trade patterns in the Asian crude market. China’s state-owned refiners have temporarily halted purchases of ESPO crude, Russia’s primary export grade to China. The move follows recent U.S. sanctions on Rosneft PJSC and Lukoil PJSC, two of the biggest players involved in the production and export of Russian oil. The U.S. has also targeted the Rizhao oil terminal — a key hub that previously handled nearly 10% of China’s total crude imports — further restricting the flow of Iranian barrels into the country. Private refiners, often more flexible and more willing to take on higher-risk crude, are also pulling back. Their caution intensified after Shandong Yulong Petrochemical Co., a major buyer of discounted Russian oil, was blacklisted by the EU and the UK. The combination of sanctions pressure and limited import quotas has temporarily cooled appetite for “sensitive grades,” according to market participants. Analysts say this round of sanctions is proving more disruptive than past measures. Vandana Hari, founder of Vanda Insights, notes that the scale and direct targeting of major producers could represent “a game-changer” for Russian crude flows into Asia. The slowdown in China coincides with reduced purchases from Indian refiners, suggesting that Western sanctions are achieving their intended effect of constraining Moscow’s wartime revenue. However, traders warn that unless enforcement remains strict, volumes could rebound quickly through alternative channels. Industry estimates from Rystad Energy suggest Chinese imports of seaborne Russian crude may fall by 500,000 to 800,000 barrels per day this month — a drop of up to two-thirds from normal levels. Iranian crude inflows may also decline by as much as 200,000 to 400,000 barrels per day, partly due to the Rizhao terminal’s sanction-linked slowdown and partly due to China’s already-high inventories. The lack of buyers is contributing to a growing surplus of unsold barrels at sea. According to Vortexa, nearly 48 million barrels of Iranian crude were in floating storage at the end of last week — the highest level in more than two years. Much of this oil is concentrated in the Singapore Strait and the waters off China’s eastern coast. Weak demand has driven ESPO crude to a steep discount of roughly $4 per barrel to delivered benchmark prices, widening sharply from a 50-cent discount in late October. Some traders believe these discounts may tempt smaller refiners to resort to covert methods such as disabling ship transponders or conducting ship-to-ship transfers to obscure the origin of the oil. Despite U.S. sanctions imposed in August, Dongjiakou port in Shandong is once again handling sizeable volumes of Iranian crude, underscoring the lingering economic incentives for risk-tolerant buyers. As the year-end approaches, limited import quotas among China’s private refiners may be amplifying the slowdown. Industry analysts expect refiners to request additional quotas, but even if granted, many buyers are likely to take a cautious approach until the long-term enforcement of sanctions becomes clearer. website : www.sbb-co.org number : 00989365947495 email address : jobs@sbb-co.org