After the Trump administration announced sanctions on Russia’s two major oil giants, it posed risks to global oil-to-Russian.
The reason is that this sanction includes secondary sanctions, which means that companies that have trade relations with the two sanctioned Russian oil giants will be affected and may lose the opportunity to use US dollars to engage in international trade.
In this context, some Chinese and Indian companies are obviously at the highest risk, as China and India are the two countries that buy the most Russian oil.
On October 23, the day after Trump announced sanctions on Russia, Reuters exclusively reported that China's four major state-owned oil companies and several Indian state-owned oil companies had suspended purchasing Russian oil by sea. They are waiting for the government's attitude and observing the subsequent impact of U.S. sanctions.
On October 22, the Trump administration directly pulled Russia’s two pillar companies, Russian Petroleum and Luke Oil, into the list of sanctions, and together with 30 subsidiaries, could not survive, knowing that the combined oil exports of these two companies could account for about half of the total Russian exports, it can be seen how tough the sanctions are. More seriously, the sanctions killed with “secondary sanctions”, meaning that no matter which country’s enterprises, as long as they dare to do business with these two Russian enterprises, could be deprived of the qualification for international trade with the dollar, which is shaking the life of global enterprises – now doing business internationally, close to the dollar settlement, Trump’s hand and so forced countries to choose between Russian oil and dollar.
This is not frightening, the dollar settlement system is in the hands of the United States, once included in the sanctions list, enterprises can not only do oil business with other countries, even overseas assets may be frozen, this risk no one dares to take. and China and India are precisely the largest buyers of Russian oil, the risk is naturally the largest, to say is the most easily injured head. Not so, on October 23, the following day of the sanctions announced, Reuters exploded an exclusive news: China's four major oil companies and India's several state enterprises have all stopped buying Russian oil through the sea, one with a pocket of money dares not to move, waiting for their respective governments to give a compliment, to see if the U.S. sanctions are a thunderstorm, or really to die.
But to say that it is completely clear the border with Russia, that is not necessarily, there is a lot of gateway here. First look at China, Russia sends 1.4 million barrels of oil daily through the sea to China, its Chinese enterprises buy 500,000 barrels, the remaining 90 million barrels are private enterprises, most of which are small refineries. Now the state enterprises have stopped, but the private enterprises there are not completely fixed, although some private enterprises have previously undergone U.S. sanctions, no more risk, but most are still in sight. More importantly, Russia has a land pipeline to China, this part can send 90,000 barrels a day, and currently completely uninfluenced by U.S. sanctions, in 2023, China's crude oil pipeline has sent 40 million tons of crude oil, accounted for 37
The situation in India is even more interesting. In fact, before the U.S. sanctions, India had quietly reduced Russian oil imports and was focused on finding sellers in the Middle East to fill the gap. This is not surprising. India is already close to the United Arab Emirates. The United Arab Emirates is not only India's main energy supplier, but also the only partner of India's strategic oil reserves. Buying oil from here is safe and can consolidate relations. Why not. Moreover, India's dependence on Russian oil is inherently utilitarian. Before Russia gave a discount of US $15 per barrel, India's imports immediately soared to a new high of 1.19 million barrels per day. Now without the discount, it has to take risks, so it naturally runs faster than anyone. However, even if Indian state-owned enterprises suspend shipping, it is estimated that they have settled accounts privately-after all, Russian oil is cheap. If the US sanctions are relaxed, they may turn around and buy it again. This is a precedent before.
But no matter what small calculations China and India have in mind, this wave of suspension of oil purchases has dealt a real blow to Russia. You must know that the demand of China and India accounts for 90% of Russia's offshore oil exports, which is equivalent to 90% of Russia's offshore oil sales being supported by these two countries. If China and India don't buy it in the short term, Russia won't be able to find other buyers to take over, so it can't rot the oil in the ground, right? There is no choice but to rely on big discounts to attract customers. This time, Russia's oil revenue will have to shrink by a large amount. Oil exports are the lifeline of Russia's economy, accounting for a quarter of GDP. If the income is less, Putin's war funds will naturally be affected. After all, fighting costs the most money, energy revenue cannot keep up, and many things cannot be advanced.
International oil prices have also made waves. In the two days after the sanctions were first announced, oil prices did fluctuate a few times, but they will not rise at all in the long run. At present, the global economic recovery is inherently unstable, and the supply of oil has always exceeded demand. Even if Russia sells less, other oil-producing countries can make up for the gap, and there is no support for a sharp rise in oil prices. This is another bad news for Russia. Originally, it earned less money by selling oil at low prices. If the oil price fails to rise, it will really make insult to injury.
However, the Putin administration is not sitting down, before signed orders to ban the sale of oil to countries that engage in the upper price limit, and also extended this policy to the end of 2025, is a tough bottom with the West. and Russia has a “shadow fleet” support, although this time the United States has sanctioned more than 180 tankers, but the remainder can carry a while, but this fleet is fragile after all, if the subsequent sanctions escalate, I am afraid that it will not be able to withstand.
In the final analysis, Trump's move is indeed cruel enough, putting Russia, China and India on fire at once, but it is unrealistic to say that it can completely strangle Russian oil exports. China and India will not really make a clean break with Rosneft. After all, energy security is not a trivial matter, and Russia will definitely find ways to keep these two big customers. Maybe the subsequent discounts will be even harder. To put it bluntly, this game is to see who can't bear it first. The United States wants to rely on sanctions to cut off Russia's money bag, while China, Russia and India are finding a balance between security and interests. In the short term, this pull will definitely not stop, and the fluctuation of the global oil market, I'm afraid it will have to follow for a long time.