Chinese and Indian state firms halt Russian oil purchases after US sanctions

According to industry sources cited by Reuters, China’s four major state energy companies have temporarily halted oil purchases from Russia following the US decision to impose sanctions.

PetroChina, Sinopec, CNOOC, and Zhenhua Oil are expected to avoid making new short-term shipment deals after the US imposed sanctions on Russian energy giants Rosneft and Lukoil.

This decision is projected to affect approximately one-third of the Russian oil transported to China by sea.

According to data from Vortexa and Energy Aspects, Chinese state companies import between 250,000 and 500,000 barrels of oil per day from Russia.

China’s total oil imports from Russia amount to 1.4 million barrels per day. A significant portion of this volume is imported by independent private refineries in the country.

It was also stated that private refineries aim to temporarily halt their purchases with the intention of restarting them in the future.

India is taking the same step

Meanwhile, sources speaking to Bloomberg reported that India’s leading refineries are also planning to nearly halt their oil imports from Russia due to the sanctions.

Reliance Industries, the Kremlin’s largest Indian customer, will reportedly reduce its purchases sharply or stop them entirely. Additionally, it was noted that companies such as Indian Oil Corp, Bharat Petroleum Corp, Hindustan Petroleum Corp, and Mangalore Refinery are reviewing their existing contracts.

Sources informed Reuters that both Chinese and Indian refineries plan to fill the gap left by Russian oil with purchases from the Middle East, Africa, and Latin America.

Risk of a fracture in Russia’s energy exports

According to Bloomberg data, India and China alone accounted for 90% of Russia’s seaborne oil exports in October. This amounts to approximately 3 million barrels per day.

Russia also exports approximately 300,000 barrels per day to Türkiye and around 70,000 barrels to Syria by sea. Russian oil is also delivered via pipelines to China, Hungary, and Slovakia.

The diplomatic background of the sanctions

US President Donald Trump announced on October 22 that a decision had been made to impose sanctions on two major Russian energy companies, Rosneft and Lukoil.

In the same statement, Trump also announced that he had canceled the Budapest summit where he was expected to meet with Russian President Vladimir Putin.

European diplomats speaking to Reuters reported that the Kremlin did not offer any concessions during the summit preparations.

The diplomats said that Putin rejected a ceasefire proposal and demanded that the Donbas region come under full Russian control, that Ukraine renounce its NATO membership, and that its army be significantly downsized.

The same diplomats stated that the Washington administration described Moscow’s demands as “unrealistic.”

A source on the matter said, “The Russians asked for too much, and the Americans realized there was no deal for Trump to get in Budapest.”

Another source stated that the Kremlin’s position had not changed at all compared to the talks in Anchorage.