Bloomberg: Russian oil bottleneck in China grows under weight of US sanctions

Russian oil shipments are piling up off China’s coast as traders, refiners, and shipping companies scramble to navigate the strictest-ever US sanctions on Russian energy.

Ship-tracking data from Bloomberg and Kpler reveals five tankers carrying nearly 4 million barrels of ESPO and Sokol crude from Russia’s Far East are idling in Chinese waters, Caliber.Az reports.

Four of these vessels are sanctioned by the US, leaving their cargoes undelivered.

The sanctions, which target over 180 tankers, traders, and insurers, have caused widespread disruption. Ports in Shandong province — a hub for China’s independent refiners, or “teapots” — are reportedly hesitant to accept Russian oil following a warning from a major terminal operator.

“Ports are increasingly cautious about handling sanctioned crude, and traders are exploring alternatives like ship-to-ship transfers and smaller, less-regulated ports,” noted shipbrokers familiar with the situation.

Demand for Russian crude remains high among China’s teapot refiners due to its low cost and proximity, but the sanctions have nearly doubled the volume of stranded oil in recent days, with more likely to follow.

Adding to the chaos, state-owned and large private Chinese refiners like Cnooc, Shandong Yulong Petrochemical, and Jiangsu Eastern Shenghong are racing to secure shipments from the Middle East and other regions to hedge against potential disruptions. February cargoes are reportedly in high demand.

“Smaller refiners already facing tight margins may struggle to operate if they lose access to discounted Russian and Iranian crude,” said a trader. This puts pressure on larger state-owned companies to step in, ensure domestic fuel supply and maintain market stability.

The sanctions, designed to limit Russia’s oil trade, are reshaping Asia’s energy markets. Russian ESPO crude, a favourite among Shandong’s refiners, now faces logistical roadblocks as vessels anchor offshore, awaiting clearance or alternative solutions.

As the sanctions ripple through global energy networks, Beijing’s focus on energy security is sharpening, with state firms poised to mitigate any fallout from disrupted fuel supplies.

By Tamilla Hasanova