Sinopec Announces Significant Reduction in Russian Oil Imports

Sinopec Shanghai Petrochemical, China’s leading petrochemical company, has revealed a substantial decrease in its oil purchases from Russia for the first quarter of 2025. This announcement, made on March 20, marks a significant shift in the company’s procurement strategy, especially given that in 2024, its Russian oil imports more than doubled to 1.22 million tons, accounting for approximately 9% of its total purchases.

The decision to curtail Russian oil imports has generated considerable discussion among experts and market participants, as China has historically been a crucial market for the Russian oil industry amid ongoing Western sanctions.

Du Jun, the company’s vice president and chief financial officer, attributed the change in purchasing strategy to “major shifts” in the global economic and political landscape during a press conference in Hong Kong following the release of Sinopec’s 2024 results. While he did not directly reference sanctions, analysts suggest that the decision is influenced by concerns over potential secondary restrictions from the newly inaugurated Donald Trump administration, which has intensified scrutiny on nations continuing to engage with the Russian oil and gas sectors. The U.S. has signaled it may impose fines and limit access to American markets and technologies for such countries.

For Sinopec and other state-owned enterprises in China, maintaining stable relations with Western markets has become a priority, despite the attractive pricing of Russian oil, which has been available at significant discounts in recent years.

This shift represents a pivotal moment in the trade dynamics between Beijing and Moscow, which have strengthened since 2022 in response to Western embargoes. Following the escalation of the Ukraine conflict, China emerged as the largest importer of Russian oil, purchasing a record 107 million tons in 2023 and surpassing Saudi Arabia as Russia’s top supplier. In this context, Sinopec Shanghai Petrochemical, a subsidiary of the state-owned Sinopec Group, has been instrumental in increasing its acquisition of ESPO and other oil grades.

However, the company is now redirecting its focus toward alternative supply sources, including West Africa, the Middle East, and Brazil, in an effort to diversify its supply chain and mitigate risks associated with geopolitical tensions.