Western economies are turning up the heat on Russia, tightening sanctions and raising tariffs in an effort to squeeze its energy revenues. Yet despite mounting pressure, Russian crude exports have so far shown remarkable resilience. The EU’s lower crude price cap came into effect this week, and Washington has doubled tariffs on Indian goods to 50% as part of the efforts to pressure New Delhi over its continued imports of Russian crude. Against this backdrop, Donald Trump’s latest meeting with Vladimir Putin delivered no breakthroughs, while the war itself grinds on with drone attacks and continuing hostilities.
For India, the stakes are particularly high. Russian crude has provided plenty of discounted supply, but the value of Indian exports to the US far outweighs its imports from Russia. The balancing act is as much political as economic, with Prime Minister Narendra Modi seemingly portraying unity with Putin and China’s Xi Jinping at a summit earlier this week. Still, the question remains: how long can India maintain this middle ground before Washington’s pressure begins to bite?
So far, Russia’s crude flows look surprisingly robust. Preliminary data from Kpler shows total crude exports from Western terminals averaging close to 2.15 mbd in August, in line with July levels and actually 150 kbd higher than a year earlier. But the breakdown by buyer reveals some subtle shifts. Indian purchases slipped to around 1.35 mbd in August, down by 10% month-on-month, although the final figure may prove higher once “undecided” cargoes, accounting for 7% of the total, declare their destinations. Whether Indian refiners bounce back in September or trade declines further will be closely watched, since any sustained slowdown could hand Trump a political win and allow him to recalibrate tariffs, with the White House seemingly able to tweak tariffs as it sees fit.
China, meanwhile, has quietly stepped in. Russian crude exports from Western terminals to Chinese refiners rose to 250 kbd in August, twice July’s level. This surge reflects both the lure of steeper discounts and the seasonal opportunity to ship via the shorter Northern Sea Route during Q3, bypassing the Suez Canal.
The impact of lower EU crude oil price cap is also starting to be felt. Aframaxes, the workhorses of Russia’s western crude trade, have seen a decline in conventional liftings under price cap rules, squeezed by rising compliance risks. By contrast, mainstream Suezmaxes remain active in the Black Sea, but the volumes involved are far smaller than those shipped from the Baltic. At the same time, the dark fleet continues to shoulder a growing share of exports, keeping Russian barrels on the move.
For now, tougher sanctions and tariffs have had only a limited effect on the overall picture. Russian oil continues to flow, but the geography of that trade has somewhat shifted. India’s hesitation has been balanced by China’s enthusiasm, leaving global markets finely poised. The coming months will show whether August was a blip or the start of a more permanent reshaping of Russia’s crude export map. What is clear is that as long as there is demand, Russian oil will find a way.
Russia’s crude exports to India from Western terminals (kbd)
Data source: Gibson Shipbrokers