India and China have come to rely on cheap Russian oil and don’t want President Trump’s new sanctions against Russia’s two biggest oil companies to disrupt their economies. But the pressure is rising.
India and China can’t easily ignore the far-reaching sanctions—especially India, which holds out hope for a rapprochement with Trump.
The new measures target Russia’s Rosneft and Lukoil as well as nearly three dozen of their subsidiaries. The U.S. said it could bar foreign countries or companies from doing business with the sanctioned Russian companies and cut them off from much of the international financial system.
Major banks and conglomerates in China and India couldn’t survive long if they lost access to U.S. banks and dollars. But the Treasury Department’s announcement was ambiguous, saying merely that those who deal with Rosneft and Lukoil “may risk exposure to sanctions” in certain cases.
Analysts said India would speed up efforts to diversify its oil supplies while watching how strictly Trump enforces his crackdown.
“Countries are not going to do any dramatic shifts because Mr. Trump wakes up on the wrong side of the bed,” said Harsh V. Pant, head of strategic studies at the Observer Research Foundation, a think tank in New Delhi.
In Beijing, a foreign ministry spokesman denounced Trump, saying his moves are unilateral and have no basis in international law.
India’s oil ministry didn’t immediately respond to a request for comment.
Since the European Union cut off most crude oil imports from Russia in late 2022, China has received 47% of Russia’s crude and India has taken 38%, according to the Center for Research on Energy and Clean Air.
China has been importing Russian crude this year at a pace of about $3 billion a month, accounting for about a fifth of its total crude imports, while Russia supplies about a third of India’s oil demand. Much of that comes at a steep discount to the global price because of other countries’ sanctions on Russia since its full-scale invasion of Ukraine in February 2022.
China has spent months building up supplies. However, it also can’t escape the impact of Trump’s sanctions, said Muyu Xu, senior crude analyst at data firm Kpler. “The Chinese oil majors will likely halt buying Russian oil,” Xu said.
The Trump administration has been pushing New Delhi to halt its Russian oil purchases, aiming to choke off Moscow’s war funding. In August, the U.S. imposed a 50% tariff on Indian goods, citing its continued Russian oil imports.
India, whose growing economy needs more oil, has resisted the U.S. push because it has retooled its supply chain since the Ukraine war to rely on discounted Russian crude. Last week, Trump said India had pledged to stop buying Russian oil, an assertion Indian officials quietly disputed while avoiding contradicting the president publicly.
Prime Minister Narendra Modi is pursuing two goals: securing a trade deal with Washington to lower tariffs and avoiding disruption to energy supplies.
India could buy more barrels from the Middle East, Latin America and the U.S.—preferably in a gradual transition, analysts said.
“Whether India reduces its dependence will depend heavily on the strength of U.S. pressure and how much volatility India is prepared to absorb,” Sumit Ritolia, an analyst at Kpler, wrote in a recent research note.
Modi is facing increasing domestic pressure to hammer out a trade deal with the U.S., India’s biggest trading partner.
In September, the first full month under Washington’s 50% tariffs, India’s exports to the U.S. fell to $5.5 billion, down nearly 40% from May, according to Ajay Srivastava, founder of New Delhi consulting firm Global Trade Research Initiative.
Pant, the think-tank analyst, said Modi could use the new Russia sanctions as a “face-saving device” to persuade local interests that Trump’s demands on oil must be heeded. That could speed up negotiations on the tariffs.
Indian state refiners mostly buy Russian oil from middlemen instead of directly from Rosneft and Lukoil, providing a possible workaround to U.S. sanctions, according to analysts. However, Reliance Industries, an Indian conglomerate with a big refining business, has a long-term deal to buy crude directly from Rosneft, analysts said. Reliance didn’t respond to requests for comment.
Write to Shan Li at shan.li@wsj.com and Jiahui Huang at Jiahui.Huang@wsj.com
