China’s State Oil Companies Reduce Russian Crude Imports Amid U.S. Sanctions Concerns

China’s state-owned oil companies are scaling back purchases of Russian crude due to fears of U.S. sanctions, Orda reports, citing Reuters.

Chinese firms have avoided transactions with suppliers directly targeted by sanctions.

They are taking a break for now while contemplating if there are ways to work around,a source told Reuters. 

Russia remains China’s largest crude supplier, accounting for 20% of its total oil imports. 

Despite deepening trade ties, increasing economic pressure and the risk of secondary U.S. sanctions have forced many Chinese financial institutions to reduce dealings with Moscow.

Sinopec and Zhenhua Oil halted purchases entirely. PetroChina and CNOOC continued shipments in March, but at reduced volumes, sources familiar with the matter told Reuters.

A Sinopec official said the company paused Russian oil purchases while conducting additional compliance checks regarding U.S. sanctions. The company is waiting for clarity on U.S.-Russia negotiations and may resume buying if sanctions are eased or lifted.

We are assessing the long-term risks and awaiting a clear picture before making any new commitments,a Sinopec source stated. 

PetroChina, a major buyer of Russia’s ESPO (BCTO) crude from Rosneft, continued offshore shipments in March but at lower volumes, sources told Reuters. CNOOC, another major buyer, also scaled back deliveries.

U.S. Sanctions

In one of his final acts in office, former U.S. President Joe Biden imposed sweeping sanctions on Russia’s energy sector on January 10. These measures targeted:

• Gazprom Neft and Surgutneftegaz, key Russian energy companies
  
• More than 180 oil tankers transporting crude from Russia, Iran, and Venezuela
  
• Insurance firms involved in Russian oil logistics

These restrictions have significantly impacted Russia’s energy trade, leading major Chinese firms to reassess their dealings with Moscow.