How China could make or break US sanctions on Russian oil

Using Richard Nixon’s “madman theory” of international relations, it appears that US President Donald Trump aims to pressure Russia and China into making significant concessions. His decision to impose sanctions on Russia’s oil giants, Rosneft and Lukoil, could not only impact the Russian economy but also the Kremlin’s energy cooperation with Beijing. Before Russia’s invasion of Ukraine in 2022, Europe imported substantial amounts of Russian crude. While China has been the top individual purchaser since 2017, the European Union as a whole remained Russia’s largest market. However, no single EU member individually exceeded Beijing’s imports. Following Western sanctions on Russia, Moscow redirected its oil exports eastward. As a result, by 2025, China accounted for around 47 per cent of Russia’s crude oil shipments, followed by India with 38 per cent. It is no secret that Beijing and New Delhi are benefiting from discounted Russian oil imports. Nevertheless, China and India do not seem willing to put all their eggs in one basket and risk the repercussions of Trump’s secondary sanctions. US unilateral sanctions have a global reach that effectively isolates companies from international finance and trade. It is, therefore, no surprise that Chinese state-owned corporations have reportedly suspended purchases of Russian oil, while Indian refiners are preparing to sharply reduce imports. That, however, does not necessarily mean that Beijing and New Delhi plan to completely end energy cooperation with Moscow. Such a move would severely impact their economies. Given that India’s Nayara Energy, the country’s second-largest single-site oil refinery, is already affected by Western sanctions, it will almost certainly continue purchasing Russian crude in some capacity. China, meanwhile, has reportedly set a quota for oil imports through non-state channels for 2026 at 257 million tonnes. Even if state-owned companies do not resume oil imports from Russia, Beijing still has the means to maintain or even increase purchases of Russian crude through private refiners. In 2024, China imported a record 108.5 million metric tonnes of crude oil from Russia, which indicates that it possesses the infrastructure and logistical capacity to further expand its intake in line with its non-state import quota. Fully aware of that, Trump seems to be indirectly pressuring China to at least significantly limit, if not end, cooperation with Russia. Are his threats of tariffs part of this strategy? Given that Trump has postponed his summit with Russian President Vladimir Putin and is instead focusing on a meeting with President Xi Jinping, it is possible that his priority is to reach a deal with Beijing, lowering tariffs in exchange for Chinese compliance with US sanctions on Russian oil companies. It is, however, unlikely that Beijing would accept such an arrangement, at least until there is a sustainable alternative to cheap Russian oil. Beijing “opposes unilateral sanctions that have no basis in international law or authorisation of the UN Security Council”, indicating that it will not give up on energy ties with Moscow. China could use the same strategy it has employed to buy Iranian crude. Officially, Chinese customs have not reported oil shipments from Iran since July 2022. In reality, China remains by far the largest consumer of Iranian crude, despite sanctions imposed on the Islamic republic by the US. To this day, Chinese independent refineries continue purchasing Iranian oil, while many large private and state-owned refineries avoid it. Most Iranian oil reaching China is transferred from sanctioned to non-sanctioned tankers in the Persian Gulf or the Strait of Malacca, rather than being shipped directly. Although India could take the same approach and continue purchasing Russian oil, New Delhi appears to have chosen to diversify its oil imports by buying crude from producers such as Azerbaijan and Nigeria. India’s move, as well as the suspension of Russian oil imports by China’s state-owned companies, could significantly impact the Russian economy. It is estimated that a 5 to 10 per cent reduction in exports by Rosneft and Lukoil, combined with discounts on energy, could reduce Russia’s budget revenue by about US$1.5 billion per month. Putin claims US sanctions will not significantly affect Russia’s economy. However, the Kremlin’s calls for the West to lift sanctions as a precondition for a potential ceasefire in Ukraine show that Moscow is, in fact, concerned about their economic impact. But that does not mean that Putin will rush to make concessions to Trump. “I am glad he feels that way. I’ll let you know about it in six months from now. Let’s see how it all works out,” Trump said, commenting on Putin’s statement about the alleged resilience of the Russian economy. Meanwhile, Russia is likely to aim to diversify its oil exports, which will be easier said than done, as very few countries are ready to risk facing secondary US sanctions. Meanwhile, Russian policymakers should also worry about China’s willingness to reduce oil imports. In the first half of 2025, Russia delivered 49.1 million tonnes of oil to China, which is a 10.8 per cent decrease from the same period in 2024. More importantly, in the first nine months of 2025, Russia’s budget revenues from oil and gas fell by 20 per cent compared to last year. Thus, unless China decides to defy American sanctions and continue purchasing Russian oil – be it through state-owned or private refineries – the Kremlin will undoubtedly have a hard time sustaining its war economy and achieving its strategic goals in Ukraine.

How China could make or break US sanctions on Russian oil

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}As Beijing and New Delhi rush to avoid secondary sanctions, Moscow must come to terms with how long its economy can last under pressure

As Beijing and New Delhi rush to avoid secondary sanctions, Moscow must come to terms with how long its economy can last under pressure