Trump wants to financially strangle Moscow's war machine! How hard will oil sanctions hit Russia?

US President Donald Trump's attempts to financially strangle Moscow's war machine in Ukraine by imposing sanctions on Russian oil companies have caused an immediate backlash in his offices in India and China. Some oil companies have begun canceling orders to beat the November 21 deadline, following sanctions on the two largest Russian oil companies, Rosneft and Lukoil, according to industry sources, CNN reported, quoted by Focus.

So far, the world's two most populous countries, India and China, have largely resisted the US leader's pleas to stop buying Russian oil - and his threats about what might happen if they don't. But early signs of adherence to Trump's "huge" sanctions may simply be a waiting game, analysts say, as players find new ways to deliver and acquire cheap Russian black gold through a complex circumvention system that includes middlemen and a "shadow fleet" of tankers with opaque ownership.

How much Trump’s sanctions will hit Russia may ultimately be decided in Asia.

According to analysts, India and China import between 3.5 million and 4.5 million barrels of Russian oil a day, a significant portion of which comes from the newly sanctioned companies.

Richard Jones, crude oil analyst at Energy Aspects, said supplies of 1.4 million to 2.6 million barrels a day for India and China could run out when the November deadline comes.

For India, the sanctions present a familiar and complex dilemma, pitting its enduring need for cheap energy and its legacy of friendship with Moscow against deep and growing strategic ties with Washington. New Delhi is also hoping for rapprochement with Trump after he imposed a 50% tariff on the country’s exports to the US, but its purchases of Russian oil have proved a stumbling block.

For China, a critical economic lifeline for Russia since the start of the war, the calculus will be about protecting its major oil companies while balancing what it sees as a key geopolitical partnership with Russia with the interest of ensuring that the war does not end Putin’s rule.

"Self-sanction"

After Western countries banned the shipping of Russian crude by sea following Moscow’s invasion of Ukraine, the Kremlin successfully turned east, finding an economic lifeline in China and India, which were absorbing millions of barrels a day at a deep discount. A win-win scenario for them, but at the expense of Ukraine, in the eyes of the West.

Both Asian countries have consistently defended these purchases, presenting them as part of their national interests in ensuring energy security. But in the short time since the Trump administration announced its sanctions on Rosneft and Lukoil, there are signs that these sanctions are already starting to have an impact.

The sanctions “will inevitably bring costs to the Russian economy”, said Farva Aamer, director of “South Asia Initiatives” at the Asia Society Policy Institute.

"The Kremlin will be closely watching who absorbs the share of Russian crude that India is giving up as it pulls back, and for now China may have no incentive to expand its intake.“

In China, Russia's most loyal economic partner, several state-owned oil companies have canceled some purchases of Russian crude, according to Janiv Shah, vice president of oil markets and downstream analysis at Rystad Energy.

The hesitation is also reflected in India, where the country's largest private refiner, Reliance, told CNN it would "adapt refinery operations to meet compliance requirements" and is "fully committed" with "compliance with applicable sanctions".

According to oil data tracking company Kpler, Reliance imported just over 181 million barrels of Russian oil between January and September this year.

On Monday, India's largest state-owned oil company, Indian Oil Corporation, said it would comply with all applicable sanctions, according to the Press Trust of India.

"For now, most Indian and state-owned Chinese buyers will effectively self-sanction for one or two cycles until they understand the US's enforcement intentions," said analyst Richard Jones.

But that may only be "until workarounds are found," Jones said.

“India is in a tougher spot,” said Clayton Siegel, chairman of the energy and geopolitics department at the Center for Strategic and International Studies, because the Chinese market is less transparent and Chinese companies are less afraid of being blacklisted by Washington.

“In short, (India) has become addicted to discounted Russian barrels. A return to its pre-war crude supply mix would mean more barrels from the Middle East, the Persian Gulf, West Africa and even the United States – at a significantly higher price, he said.

Failure to comply could pose a serious financial risk to Chinese and Indian firms, as threatened secondary sanctions could potentially cripple their ability to borrow from US banks if they still buy directly from Russia.

On Monday, Indian Foreign Minister S. Jaishankar appeared to criticize Trump's sanctions, calling energy trade "increasingly restrictive."

Without naming the US, he said that "principles are being applied selectively and what is preached is not necessarily practiced."

Geopolitical maneuvering


For Beijing, the issue goes beyond energy security and presents a critical test of its "borderless" strategic partnership with the US. with Moscow and their shared goal of countering US global influence.

"Given US pressure, China will not completely ignore US demands, but it will not do everything the US wants," said Yun Song, director of the China program at the Stimson Center think tank. "Ultimately, China will not abandon Russia."

There is also a possibility that Moscow and Beijing have already begun "personal talks" for "potential solutions or countermeasures", according to William Yang, senior analyst for Northeast Asia at the International Crisis Group.

"I don't see a scenario where China would simply decide to cut off Russian energy sources because that would cause a deep shock to China's own economy and industries," he said.

Since the start of the war, large Chinese firms and banks have largely sought to comply with US sanctions to avoid secondary sanctions on their international businesses.

Even if large Chinese state-owned enterprises pull back, analysts suggest that smaller independent refiners, known as "teapots", may continue to buy Russian oil through third-party buyers, although their ability to absorb additional quantities would be limited in the short term. It is unclear how much of China’s total trade in Russian oil these refineries now account for, analysts say.

China’s Foreign Ministry said on Thursday that the country “has consistently opposed unilateral sanctions.”

New Delhi has yet to comment publicly, but the sanctions create a direct clash between two of India’s core national interests.

India’s economic growth and energy security have become dependent on cheap Russian crude from a partner with whom it shares a historic friendship. But its growing strategic partnership with the United States, deepened through the Quad security grouping, is equally vital to countering the growing influence of rival China in the Indian Ocean.

This geopolitical calculus is complicated by immediate economic incentives. New Delhi is currently negotiating a trade deal with Washington that would provide its export industries with a much-needed reprieve after the Trump administration’s earlier tariffs put millions of jobs at risk.

Aamer, the Asia Society expert, said that “demonstrating a tangible reduction in oil trade with Moscow, even gradually, could help seal the deal and be a key goodwill gesture.”

However, with Prime Minister Narendra Modi expected to host Putin in New Delhi later this year, any change is likely to be a “tactical recalibration for now, not a full-blown strategic retreat.”

The Shadow Fleet

Underneath all these geopolitical maneuvers lies Russia’s “shadow fleet” – a strategic asset designed specifically to transport its crude oil beyond Western surveillance.

The scale of this network has grown rapidly in recent years. A May report by S&P Global identified 940 unique ships participating in this fleet, a 45% increase from the previous year.

The European Union, the United Kingdom, and the United States have taken serious measures to disrupt the network, collectively blacklisting hundreds of ships.

Since its invasion of Ukraine, Russia has managed to maintain its crude oil exports despite the “logistical challenges” posed by sanctions, Kpler analysts noted earlier this month.

And it is a reality that underscores the challenges associated with the disruption of Russia's oil revenues.

Following previous U.S. sanctions on major Russian oil companies “Gazprom“ and "Surgutneftegaz", Indian refiners simply adapted by buying oil through a complex network of "third parties or intermediaries", said Muyu Xu, senior oil analyst at Kpler.

The same process, involving layering transactions to disguise the origin of the cargo, could also be applied to Russian oil exports to India and China after the recent sanctions, according to Xu.

""It's just a matter of changing names and redirecting", she said. "We expected things like this to happen."

Most of this sanctioned oil will end up in the "opaque Chinese market and/or be "laundered" through trade tricks,“ says strategic research expert Segal.

These workarounds would still affect Moscow's revenues, he said, because hiding in the shadows costs more.

“The biggest X factor is not what the oil traders do, but what Washington does in terms of law enforcement,“ Segal said.