State-owned oil companies in China have halted their purchases of seaborne Russian oil in a major blow for Vladimir Putin. The suspension follows the imposition of new US sanctions on Russia’s leading oil companies – Rosneft and Lukoil.
Together the companies account for nearly half of Russia’s crude oil exports, according to Bloomberg. The move is likely to have a major impact on the Kremlin’s ability to wage its brutal war in Ukraine. Oil and gas revenue accounts for up to a quarter of Russia’s budget and is the most important source of cash for Moscow’s military campaign, now in its fourth year.
Sources told Reuters that the national oil companies PetroChina, Sinopec, CNOOC and Zhenhua Oil will cease dealing in seaborne Russian oil at least in the short-term due to concern over sanctions.
Last week, the trading arm of Sinopec stopped buying Russian oil after the UK imposed sanctions on Rosneft and Lukoil.
In a further setback for the Kremlin, refiners in India are set to sharply cut their crude imports from Russia in order to comply with the new sanctions.
Both Asian countries have been some of the biggest buyers of Russian oil since Putin’s full-scale invasion of Ukraine in 2022. China receives up to 20% of its crude oil imports from Russia, while India’s purchases have soared from 4 million tonnes in 2021-22 to over 87 million tonnes in 2024-25.
Muyu Xu – senior crude oil analyst at commodities data analytics firm Kpler – called the new sanctions a “potentially very significant escalation”.
“Trump’s sanctions on Rosneft and Lukoil [will] have significant implications for Russian seaborne crude exports, potentially prompting major buyers to scale back purchases — if not halt them entirely — in the near term,” she added.
The new sanctions package was announced on Wednesday by the US Treasury Secretary, Scott Bessent.
The measures include the freezing of all US assets belonging to Rosneft and Lukoil, and a ban on American companies and individuals doing business with them.
In a further sting, the White House is threatening secondary sanctions on foreign financial institutions that do business with Rosneft and Lukoil.
This could potentially include banks that facilitate sales of Russian oil in China, India and Turkey.