China's oil stance: Putin's energy dreams in danger!

China's oil stance: Putin's energy dreams in danger!

The geopolitical landscape is increasingly being shaped by the impact of the war in Ukraine, and a recent example of this is the withdrawal of the Chinese state-owned company Yanchang Petroleum from business with Russia. How Mercury reports, the company has stopped all oil purchases from Russia and instead ordered large quantities of crude oil from the United Arab Emirates and Kazakhstan for January 2026. In detail, this purchase includes three million barrels of crude oil, including two million barrels of Abu Dhabi Murban crude oil and one million barrels of CPC Blend.

Yanchang Petroleum, which has an impressive daily processing capacity of 348,000 barrels, is now forced to distance itself from traditionally stable Russian oil sources. This decision is not isolated; Competitor Sinopec also suspended its purchases of Russian crude oil in October. Western sanctions have put Chinese state oil companies under great pressure, forcing them to act with great caution. Russian oil exports to China and India, the two most important markets for Russian oil, could be jeopardized by these developments.

China's response to Western sanctions

Despite Yanchang Petroleum's withdrawal, China's Foreign Minister Wang Yi and Russia's Foreign Minister Sergei Lavrov recently called Western sanctions against Russia illegal and counterproductive. During two days of talks in Anhui province, originally scheduled to discuss the future of Afghanistan, both ministers acknowledged the negative impact of these unilateral measures. The close solidarity between Russia and China is becoming increasingly clear, with both countries wanting to strengthen their strategic partnership in order to act unified on global issues, such as oe24 reports.

This positioning is also reflected in China's diverse energy alternatives. The Middle Kingdom does not rely on Russian gas and can rely on a wide range of energy resources. Geopolitical tensions and sanctions are driving Russia to turn more towards Asia, but this reorientation also carries risks. Because Russia could end up in a dependent position towards China.

The future of energy cooperation

A central element of this new close collaboration is the planned “Power of Siberia 2” pipeline project. This gas pipeline will transport gas from the Yamal fields to China via Mongolia and could deliver up to 50 billion cubic meters of gas annually. As negotiations between Russia and China continue, it is already clear that Russia is in a weaker negotiating position. China may negotiate more favorable terms, with implications for European buyers struggling due to rising energy prices, while Russia aims to significantly increase existing supplies to China. Unsurprisingly, this could lead to further exodus of companies and jobs in Europe Outlook underlined.

In a market where Europe, and especially Germany, pays up to three times as much for electricity as the USA and almost twice as much as France, China is reaping the benefits in this new constellation. Cheaper energy prices could lead to China benefiting even more from Russia's energy supplies, while Russia is forced to explore new avenues due to its isolation in European markets. The current situation outlines not only a fundamental restructuring of energy markets, but also a profound rethinking of geopolitical relations.