The United States has recently intensified sanctions on Russian crude oil, aiming to cut Moscow’s revenue amid its war in Ukraine. This raises a critical question: Will major buyers like India and China comply, or will they keep purchasing discounted Russian oil? The answer is clear—they’re unlikely to stop. Here’s why.
What’s New in the US Sanctions?
The latest US measures focus on enforcing the G7’s $60-per-barrel price cap on Russian oil. The Treasury Department has blacklisted ships and companies accused of bypassing the cap, threatening secondary sanctions on buyers using non-compliant shipping services.
While the US can’t directly pressure India and China, it aims to disrupt intermediaries like insurers and shippers. However, both Asian nations have already established workarounds, making compliance optional.
India’s Strategy: Cheap Oil Over Politics
India, the world’s third-largest oil importer, has become one of Russia’s top buyers since the Ukraine war began. Russian crude now makes up over 35% of India’s imports—up from just 2% before the conflict. The driving force? Steep discounts.
- Economic Benefits: With Brent crude at $80–$85/barrel, Russian Urals is often $15–$20 cheaper, helping India manage inflation.
- Alternative Payments: India uses rupee-ruble trade deals, avoiding US-dollar transactions and sidestepping sanctions.
- Geopolitical Neutrality: New Delhi avoids taking sides in the Ukraine war, prioritizing national economic interests.
Indian refiners also mix Russian crude with other grades to mask its origin, ensuring smooth supply chains. As long as discounts exist, India has no reason to stop buying.
China’s Defiance: A Geopolitical Move
China, Russia’s biggest oil customer, has openly ignored Western sanctions, boosting Russian crude imports by 25% in 2023. Beijing’s approach is strategic:
- Energy Security: Reducing reliance on Middle Eastern and US oil aligns with China’s long-term stability goals.
- Strengthening Ties with Russia: Closer energy cooperation helps counter US influence, with payments in yuan weakening the dollar’s dominance.
China also operates a shadow tanker fleet, bypassing Western maritime services. US sanctions may slow but won’t stop its purchases.
Why India & China Won’t Comply
Key reasons both nations will keep buying Russian oil:
- No Binding Agreement: Neither India nor China has accepted the G7 price cap—they see it as unilateral and unenforceable.
- Domestic Needs: India needs affordable fuel for growth; China prioritizes self-sufficiency amid US tensions.
- Independent Trade Systems: Both have built alternative payment and shipping networks to keep Russian oil flowing.
US Leverage Is Limited
Washington’s options are limited:
– Secondary sanctions could target middlemen, but penalizing India or China directly risks major trade disputes.
– The US relies on India as a regional counterbalance to China, making aggressive sanctions unlikely.
Conclusion: No Major Changes Ahead
Unless the US imposes extreme measures—like a full ban on Russian oil transactions—India and China will keep buying discounted crude. Economics and geopolitics outweigh sanctions pressure. As an Indian official put it: “We’ll buy oil wherever it’s cheapest.”
For now, Russian oil keeps flowing eastward—sanctions or not.
Stay tuned for more insights on global energy trends and geopolitics.
