Russia faces sharp decline in oil exports to China due to new US sanctions

Russia faces severe consequences from new US sanctions. Chinese and Indian refiners will source more oil from the Middle East, Africa, and the Americas, boosting prices and freight costs, Marine Link reported.

According to analysts, US sanctions on Russian producers and ships will curb supplies to Moscow’s top customers.

The US Treasury on January 10 imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegas and also 183 vessels of the ‘shadow fleet’ that have shipped Russian oil, targeting the revenues Moscow has used to fund its war with Ukraine.

Most of these tankers have been used to transfer Russian oil to India and China as Western sanctions and the price cap imposed by the G7 countries in 2022 shifted Moscow’s oil trade from Europe to Asia. 

Among the newly sanctioned ships, 143 are oil tankers that handled more than 530 million barrels of Russian crude in 2024, about 42% of its total exports. China received nearly 300 million barrels of this amount.

Read more: US imposed large-scale sanctions against Russian oil and shadow fleet

For the first 11 months last year, India’s Russian crude imports rose 4.5% on year to 1.764 million bpd, or 36% of India’s total imports. China’s volume, including pipeline supply, was up 2% at 99.09 million metric tons (2.159 million bpd), or 20% of its total imports, over the same period.

The new penalties will drive China and India back into the compliant oil market in order to hunt more supplies from the Middle East, Africa, and the Americas.

Russia’s Foreign Ministry on January 11 said that Moscow would continue with significant oil and gas projects and criticized fresh U.S. sanctions targeting Moscow’s energy industry as an attempt to damage Russia’s economy at the risk of destabilizing worldwide markets.

Russia’s foreign ministry statement also claimed Russia would react to Washington’s “hostile” activities while developing its foreign policy agenda.

Ukraine’s President, Volodymyr Zelenskyy, stated the actions would “deliver a significant blow” to Moscow. “The less revenue Russia earns from oil… the sooner peace will be restored,” he declared.