New US Sanctions Disrupt Chinese and Indian Russian Crude Purchases
New US sanctions on Rosneft and Lukoil have caused China and India, the top buyers of Russian crude, to reduce purchases and seek workarounds. Chinese and Indian buyers are suspending deliveries from the sanctioned firms, while exploring options like shell companies and nonsanctioned suppliers. The impact could significantly reduce Russian oil imports to both countries in the coming months.
Recent US sanctions on Russia's two largest oil companies, Rosneft and Lukoil, have disrupted crude oil purchases by China and India, the two biggest markets for Russian oil. Both countries are trying to balance their commercial interests with compliance concerns. Chinese national oil companies have suspended deliveries from Rosneft and Lukoil, even for cargoes arriving before the official wind-down period ends, while Indian refiners have mostly paused purchases and are seeking ways to import from nonsanctioned Russian companies. The suspension could reduce Russian imports to India by 50%-75% in December. Market players are exploring workarounds, such as using shell companies or transferring ownership to nonsanctioned entities. Smaller Chinese independents may continue buying, but with increased caution. Banks are scrutinizing transactions, and buyers are taking a wait-and-see approach, expecting that alternatives will eventually keep Russian barrels flowing despite the sanctions.
