India turns away from Russian oil. Will China be next?
In light of India’s forced refusal to buy Russian oil due to U.S. threats of higher tariffs, China remains Russia’s only serious buyer.
India’s state-owned refineries have decided to temporarily halt purchases of Russian oil following the additional 25% tariffs imposed by Donald Trump on Indian goods. In announcing the move, Trump warned, “We have already done this with India; we may do it with China.”
The new tariffs against India took effect on August 7, leaving China as the only major importer of Russian oil. According to Bloomberg, Russia has offered China additional volumes of Urals crude—previously purchased by India—for prompt delivery in October at discounted prices. Urals is typically shipped from ports in western Russia, and China rarely buys it due to the distance and high transportation costs. Chinese refineries mainly import ESPO crude from Russia’s east.
Following the U.S. sanctions, Indian state companies began gradually cutting back on Russian imports. Until now, India had been the world’s second-largest importer of Russian oil. However, India’s withdrawal has created opportunities to buy higher-quality grades at lower prices. Urals for October delivery is now being offered to Chinese buyers at a cheaper rate: the premium over Brent has fallen from $2.50 to $1.50 per barrel.
It is unclear exactly how much of this grade China has bought in recent days, but traders believe it may have acquired five to ten cargoes already—a significant volume, though experts say it will not be enough to offset Russia’s losses. State-owned Chinese refineries remain cautious, as trade talks with the U.S. are still underway and it is uncertain what to expect from Trump. Bloomberg estimates that in July 2025, Russia’s oil revenues had already fallen by one-third due to lower global prices and a stronger ruble.
In a comment to Bloomberg News, China’s Ministry of Foreign Affairs stated that “it is legal and legitimate for China to conduct normal economic, trade, and energy cooperation with all countries in the world, including Russia.” This was Beijing’s response to Trump’s threat to impose secondary sanctions on China over its continued purchases of Russian oil.
Despite the firmness of such statements, Beijing is hurrying to take advantage of the current pause ahead of the expected meeting between Trump and Putin next week, snapping up expensive Russian oil at low prices. How the situation develops will depend on what the U.S. and Russian presidents agree upon.
Trump announced his intention to impose secondary sanctions on China last week. U.S. Treasury Secretary Scott Bessent told Fox News that tariffs against China “could be considered at some point,” though the timing remains unknown. Meanwhile, his adviser Peter Navarro believes such measures “could harm the U.S.”
According to ProFinance.Ru, the fate of Russian oil is now in China’s hands. U.S. efforts to curb Russian oil shipments to India raise the question of what will happen to millions of barrels of crude. China, the most likely destination for surplus oil, does not recognize unilateral sanctions and buys both Russian and Iranian oil. However, it is also wary of over-reliance on a single supplier, and it is unclear whether its refineries can process significantly more cargoes when the economy is not running at full capacity, ProFinance.Ru notes.
If China cannot absorb the Russian oil that India rejects, supply cuts could push global prices higher, with Capital Economics estimating an increase of $10–20 per barrel.
According to FGE and Kpler, Chinese refineries could process 400,000–700,000 barrels per day of Urals crude—and more if prices fall further. Still, this would not solve the problem, as a significant volume of Russian oil would remain without buyers. Moreover, experts point out that Russian crude is of lower quality than Iranian oil, which makes Chinese state-owned refineries cautious.
It should be recalled that U.S. President Donald Trump earlier warned that the United States would impose higher import duties on Russia and its trading partners if no agreement on resolving the conflict in Ukraine was reached within 50 days. He later shortened this deadline to 10 days, which expired on August 8.
Just days earlier, Russian experts had insisted that India and China abandoning Russian oil in the near term was impossible, as the market could not replace such volumes. Such a scenario, they argued, would trigger a sharp jump in oil prices above $100 per barrel and hurt the interests of all market participants, including the U.S., according to TASS.
Kirill Bakhtin, senior analyst at BCS World of Investments, suggested that, as has often been the case since the start of the war in Ukraine, “new potential U.S. sanctions would not affect the volumes of Russia’s exports and oil production, and the negative impact would instead be reflected in a temporary widening of discounts on Russian crude.”
But things have not gone as expected, and now Russia is waiting to see how China will act. Even without Russian oil, Beijing remains locked in a trade war with the U.S., though there have recently been signs of hope for a long-term agreement between the world’s two largest economies. For now, no one can say whether Beijing will jeopardize the possibility of a trade truce with Washington. Much will depend on whether Putin can persuade Trump. We will know on August 15.
By Tural Heybatov
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