Between 2021 and 2025, the map of Russian crude exports was completely redrawn. Europe's share fell from 51% to 11%; Asia and Oceania's surged from 41% to 82%. China and India became Russia's two largest buyers — creating a relationship of dependency every bit as risky as the European one before it, only with a different geometry.
1. The Numbers Behind the Global Reshuffle
Russia's total oil-export volume held steady despite the sanctions. It averaged 5.0 million barrels/day in 2020–2024, before dipping to 4.3 million barrels/day in the first half of 2025. The change was in destinations, not volumes. (EIA Russia)
The change in numbers:
- 2020: Europe 51%, Asia 41%, Other 8%
- 2024: Europe 12%, Asia 81%, Other 7%
- 2025 (1H): Europe 11%, Asia 82%, Other 7%
This shift presents Russia with a dual challenge. On the one hand, it has successfully kept export volumes up and avoided disruption to global markets. On the other, Asian buyers purchase on far worse terms: the average Urals price in 2025 was $54–62 per barrel, while Brent traded between $63 and $80. The widening of that gap costs Russia tens of billions of dollars a year in forgone revenue. (EIA)
2. China: The Anchor Buyer
China is Russia's most important oil buyer — and this dependency is strategic for both sides. In 2024, China imported 108.5 million tonnes of Russian crude, which accounted for 19% of all Chinese crude imports. The bill came to $65 billion, up from $24 billion in 2021.
2.1 The Delivery Routes
China receives Russian oil via two main routes. The Chinese leg of the ESPO (Eastern Siberia–Pacific Ocean) pipeline can handle 35 million tonnes a year (700,000 barrels/day). It is the principal conduit for Rosneft and Surgutneftegas crude. The pipeline opened in 2011 and was doubled with a parallel line in 2018.
Seaborne deliveries arrive by tanker from Kozmino in the Russian Far East and from Baltic Sea ports (Ust-Luga, Primorsk). These averaged 1.3–1.5 million barrels/day in 2024–2025.
What is ESPO Blend?
ESPO Blend (Eastern Siberia–Pacific Ocean) is a light, low-sulphur Russian crude grade carried on the namesake pipeline. It is easier to refine than Urals and is especially popular with Chinese refiners — both the state giants (Sinopec, CNPC) and the independent 'teapot' refiners in Shandong. ESPO Blend typically trades at a smaller discount than Urals because its quality is higher and China's pipeline infrastructure connects directly to it.
2.2 The Role of the 'Teapot' Refiners
One of the most striking features of China's energy landscape is its 38 independent ('teapot') refiners, with a combined capacity of 2.53 million barrels/day. Most are in Shandong province, and they favour discounted Russian (ESPO, Urals) and Iranian crude.
What is a 'Teapot' Refiner?
'Teapot' is the popular nickname for China's independent refiners: smaller, privately owned refineries founded in the 1990s and named after their shape. A total of 38 such refiners operate in China, most of them in Shandong province, with a combined capacity of 2.53 million barrels/day. The teapot refiners favour discounted Russian (ESPO, Urals) and Iranian crude because lower feedstock costs let them stay competitive against the state giants.
Columbia University's Center on Global Energy Policy estimates that in 2025 China imported at least 2.6 million barrels/day of sanctioned crude (Russian, Iranian and Venezuelan combined), equivalent to 22% of all its imports. The Russian share of that was at least 800,000 barrels/day. State-owned refiners (Sinopec, CNPC) cut back on Russian oil in their export-bound production in 2025. The independent teapot refiners, meanwhile, had scaled back output anyway after exhausting their import quotas, and as a rule they do not export to the EU.
2.3 Payment: In Yuan, Not Dollars
The most important trend in Sino-Russian oil trade is de-dollarisation. An ever-larger share of long-term contracts is settled in yuan and roubles, bypassing US financial sanctions. A December 2024 Financial Times analysis found that 90% of China–Russia trade is already conducted outside the dollar. In the long run, this erodes the dollar's dominance in global oil commerce and gives Beijing greater geopolitical room for manoeuvre.
3. India: The Refining Giant
If China is the 'anchor buyer', India is the 'refining giant'. Indo-Russian oil trade expanded seventeenfold after 2022: imports rose from 0.1 million barrels/day to 1.7 million barrels/day by 2024, making India Russia's single largest buyer.
3.1 The Growth in Numbers
India's imports of Russian crude:
- 2021: ~0.1 million barrels/day (a negligible share of total imports)
- 2022: ~0.9 million barrels/day
- 2023: ~1.5 million barrels/day
- 2024: ~1.7 million barrels/day
- 2025 (1H): ~1.6 million barrels/day
In 2024, India imported $52.7 billion worth of Russian crude. Russian crude's share of India's total crude imports rose to 35%, up from 2% in 2021.
| Year | China (mn barrels/day) | India (mn barrels/day) |
|---|---|---|
| 2020 | 1.7 | 0.05 |
| 2021 | 1.6 | 0.1 |
| 2022 | 1.9 | 0.9 |
| 2023 | 2.1 | 1.5 |
| 2024 | 2.2 | 1.7 |
| 2025 (1H) | 2.0 | 1.6 |
Source: Kpler, EIA. India's Russian imports grew roughly seventeenfold in four years, while China's remained steadily high.
3.2 The Refining Arbitrage: How India Profits
India's oil strategy rests on refining arbitrage: buying cheap Russian crude, refining it, and selling the products at a higher price. India's refining capacity is 5.17 million barrels/day, the fourth-largest in the world after the US, China and Russia.
The two main players are Reliance Industries (Jamnagar refinery) and Nayara Energy (Vadinar refinery). In January 2025, Reliance signed a 10-year contract to buy 500,000 barrels/day of Russian oil. Russian Urals accounted for more than 40% of the Jamnagar refinery's imports in 2024.
Nayara Energy is 49% owned by Rosneft, the Russian state oil company. Russian Urals made up 72% of the refinery's imports in 2025.
What is Refining Arbitrage?
Refining arbitrage is the practice of buying cheap crude (in this case, discounted Russian Urals), processing it into diesel, petrol and jet fuel, and selling the products at a higher market price. The gap — the so-called 'refining margin' — is the refiner's profit. With Russian crude, that margin is especially wide because Urals trades at a discount of $8–15 to Brent. For India, refining margins were twice their normal level in 2023–2024.
3.3 EU Exports: The 'Laundered' Russian Oil
India's refined-product exports to the EU rose 132% between 2021 and 2023, from 11.84 million tonnes to 27.48 million tonnes, and levelled off at 26.20 million tonnes in 2024. The main exports were diesel, petrol, jet fuel and naphtha. The chief destinations were the Netherlands (Rotterdam, 21% share), France and the United Kingdom.
The EU's 18th sanctions package (21 January 2026) closed this loophole. ICRA, an Indian credit-rating agency, estimates that $14.3 billion of India's annual refined-product exports are now at risk. India is responding by diversifying its export markets: it is channelling refined products to Asia, Africa and Latin America. (ICRA / KNN India)
| Metric | China (2024–25) | India (2024–25) |
|---|---|---|
| Daily imports (mn barrels) | 2.0–2.2 | 1.6–1.7 |
| Share of Russian exports (%) | 45–50 | 30–35 |
| Annual import value ($bn) | ~65 | ~53 |
| Main delivery route | ESPO pipeline + seaborne | Seaborne (Baltic, Black Sea) |
| EU exports of refined products (Mt) | ~1.8 | ~26 |
| Settlement currency | Yuan/rouble | USD (mixed) |
Source: EIA, Kpler, CREA (Centre for Research on Energy and Clean Air), India Ministry of Commerce, China Customs
4. Do China and India Replace the European Shortfall?
The key question: now that Europe has walked away from Russian oil, do China and India fully make up the loss? The answer is yes on volume, no on revenue.
4.1 Volume: The Replacement Works
The volume of Russian oil that the EU 'abandoned' was roughly 2.5–3.0 million barrels/day. The combined increase in Chinese and Indian imports between 2021 and 2024 came to roughly 2.0–2.3 million barrels/day, which covered most of the gap. The remainder was picked up by Turkey, the United Arab Emirates and other Asian buyers. (EIA)
4.2 Revenue: The Cost of the Discount
Here the picture changes. Russia's total oil-export revenue:
- 2021: ~$111 billion
- 2022: ~$149 billion (elevated wartime prices)
- 2023: ~$122 billion
- 2024: ~$124 billion
- 2025: ~$122 billion
The $122 billion figure for 2025 is more than 30% below what Russia could have earned at European market prices ($70–80 per barrel). Under those terms, export revenue would have been around $160–180 billion — which means the Asian 'discount' has cost Russia $40–60 billion a year in forgone revenue.
The Oxford Energy Institute estimates that oil and gas revenues accounted for just 23% of the Russian state budget in 2025, down from roughly 50% in 2011–2014. The shortfall was plugged by raising other taxes (VAT, corporation tax) and drawing down the National Wealth Fund. (Oxford Energy)
5. Is This Model Sustainable?
The Russia–Asia oil trade model is under strain on multiple fronts.
5.1 US Sanctions Pressure
On 22 October 2025, the United States (the Trump administration) imposed sanctions on Rosneft and Lukoil — the first major wave of US sanctions in the second Trump presidency. Indian refiners were hit directly: Rosneft was the main supplier to both Reliance and Nayara. Reliance initially paused Russian imports, before resuming shipments under a special licence from US authorities.
Why Did the US Sanction Rosneft?
Rosneft is the Russian state oil company, responsible for roughly 40% of Russian oil exports. The Trump administration's October 2025 sanctions aim to stop Rosneft from selling cheap crude to Indian and Chinese refiners, which then export refined products to Western markets. The sanctions hit refiners directly: any company trading with a sanctioned entity risks exclusion from the US financial system. This is why Reliance paused Russian imports for its export-bound production.
5.2 The EU's 18th Sanctions Package
The import ban that took effect on 21 January 2026 targets refined products and hits India's EU exports directly. ICRA estimates this means an annual market loss of $14–15 billion for Indian refiners. (ICRA / KNN India)
5.3 Logistical Constraints
Shipping Russian oil to Asia is logistically harder and costlier than the old European route. The journey from Baltic Sea ports to India takes 30–40 days, compared with the old 7-day trip to Europe. Shipping costs have risen 30–50%.
5.4 Buyer Concentration Risk
For Russia, the biggest risk is buyer concentration. If China or India were to slash imports for political or economic reasons, Russia would have only limited alternatives. Europe is no longer an option because of sanctions. Turkey, Brazil and some African countries buy smaller volumes, but combined they cannot replace either China or India.
"Russia has successfully rerouted its oil exports, but it has paid a price. Asian buyers purchase on far less favourable terms, and the escalation of sanctions further narrows the room for manoeuvre."
— James Henderson, Oxford Energy Institute, February 2026 report
6. Counterarguments and Blind Spots
The sections above suggest that China and India 'replaced' Europe and that Russia ended up worse off. That is not the whole story.
Russian oil-export revenues have not collapsed. They were $124 billion in 2024 and $122 billion in 2025 — exceeding the $111 billion recorded in 2021. Higher volumes (Chinese and Indian buying) partly offset the price decline. Oxford Energy Institute data show that 'extraordinary' oil revenues have fallen, but the underlying export machine keeps turning. (Oxford Energy)
For China, Russian oil is a strategic advantage. Discounted prices, pipeline delivery and de-dollarised settlement all serve Beijing's geopolitical interests. China is not 'replacing' anyone; it is deliberately cultivating Russia's dependency on China — one that pulls Moscow into Beijing's sphere of influence.
For India, the refining arbitrage remains profitable. The EU's 18th sanctions package will reduce EU-bound exports, but India is diversifying its markets: it is channelling products to Asia, Africa and Latin America. Refining margins remain attractive.
The 'discounted price' is relative. Urals traded at $54–62 per barrel in 2025. That is below Brent, but above Russian production costs (roughly $15–20 per barrel). Russia still exports profitably — it simply earns less than before. At the start of 2026, however, the Hormuz oil shock briefly reversed the picture: Urals delivered to India overtook Brent and traded at a premium.
7. What to Watch
- India's Russian import volumes (Kpler monthly data): a drop below 1.5 million barrels/day would signal that sanctions are biting
- Utilisation of the ESPO pipeline's Chinese spur (Transneft quarterly data): growth in pipeline deliveries signals long-term dependency
- The Urals–Brent price spread (EIA monthly data): a gap above $30 means demand for Russian crude is weak
- Shifts in Reliance and Nayara's crude sources (S&P Global, Reuters): a falling Russian share would show sanctions having an effect
- India's new refined-product export destinations (India Ministry of Commerce): a measure of the diversification trend
In the next instalment: Europe without Russian energy — what incentive might Russia have to rebuild the relationship, and what can Europe do without cheap Russian energy?