China, India seek new supplies as U.S. sanctions tighten grip on Russian oil

Chinese and Indian refiners adapt to U.S. sanctions on Russian oil, seeking alternative supplies from Mideast and Africa.

Chinese and Indian refiners are seeking alternative fuel supplies as they adapt to severe new U.S. sanctions on Russian producers and tankers that are designed to curb the revenues of the world’s second-largest oil exporter.

U.S. President Joe Biden’s administration imposed its broadest package of sanctions so far targeting Russia’s oil and gas revenues on Friday (January 10, 2025) to give Kyiv and Donald Trump’s incoming team leverage to reach a deal for peace in Ukraine.

The incoming Mr. Trump administration has not yet responded to requests for comment.

The U.S. Treasury imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegaz, as well as on 183 vessels that form part of a shadow fleet that has so far allowed Russia to skirt sanctions to get its oil to global markets.

According to Morgan Stanley, which cited data from tanker tracker Vortexa, the tankers subject to the latest sanctions carried around 1.5 million barrels of crude oil per day in 2024. That equates to around 1.4% of global oil demand.

Many of them have been used to ship oil to India and China as Western sanctions and a price cap imposed by the Group of Seven countries in 2022 shifted trade in Russian oil from Europe to Asia. In addition, some tankers have shipped oil from Iran, which is also under sanctions.

Oil prices have jumped. Global benchmark Brent crude rose on Monday (January 14, 2025) above $81 a barrel to its highest since August and the premium of prompt crude to that for delivery six months later has risen to its highest since April, implying traders expect supplies to remain tight.