What Happened
- China's imports of Russian crude oil are set to reach a new record of approximately 2.07-2.08 million barrels per day (bpd) in February 2026, up from 1.7-1.72 million bpd in January.
- India's Russian crude imports have fallen sharply to an estimated 1.159 million bpd in February, reaching a two-year low, as New Delhi scales back under Western sanctions pressure and amid US trade negotiations.
- China has replaced India as Moscow's top client for seaborne oil shipments since November 2025, with independent Chinese refiners (known as "teapots") snapping up deeply discounted Russian cargoes.
- Russian oil prices have dropped to $9-$11 per barrel below benchmark ICE Brent for January-February deliveries to China, the lowest discount in years for Urals crude.
- The shift reflects broader geopolitical realignments, with India reportedly agreeing to reduce Russian oil purchases as part of a trade deal with the US that saw Washington cut import tariffs on Indian goods to 18% from 50%.
Static Topic Bridges
G7 Oil Price Cap Mechanism
The G7 oil price cap was implemented on 5 December 2022, setting a ceiling of $60 per barrel on Russian seaborne crude oil. The mechanism works by prohibiting G7-based maritime service providers (shipping, insurance, financing) from handling Russian crude unless it is purchased below the cap price. The policy aims to achieve three objectives simultaneously: maintain global oil supply, reduce upward pressure on energy prices, and limit Russia's oil revenues used to fund the Ukraine conflict.
- Enforced through a maritime attestation process requiring proof that crude was purchased below the cap price
- Covers both crude oil ($60/barrel cap since December 2022) and petroleum products (February 2023)
- Coordinated by the G7 Price Cap Coalition including EU, Australia, and other partners
- The cap includes an adjustment mechanism to stay 5% below market price, reviewed every two months
Connection to this news: The price cap has driven the growth of a "shadow fleet" to circumvent sanctions, and the shifting trade patterns between India and China for Russian oil are a direct consequence of varying levels of compliance with the sanctions regime.
India's Energy Security and Import Dependency
India is the world's third-largest oil consumer and importer, with crude oil import dependency reaching approximately 88-89% in FY 2024-25. India imported about 242.4 million tonnes of crude oil in FY 2024-25, consuming 4.7-5 million bpd. This structural dependency makes India highly vulnerable to global oil price volatility, supply disruptions, and geopolitical pressure from both oil-exporting and sanctioning nations.
- India's crude oil import dependency: ~88-89% (FY 2024-25)
- Top suppliers historically: Iraq, Saudi Arabia, Russia, UAE, Kuwait
- Russia rose from a negligible supplier pre-2022 to India's top crude supplier by 2023 due to deep discounts
- India's Strategic Petroleum Reserves (SPR): 5.33 million tonnes at Visakhapatnam, Mangaluru, and Padur
Connection to this news: India's decision to cut Russian oil imports under US pressure directly impacts its energy costs, as discounted Russian crude had been saving India billions of dollars annually. The shift forces India to source more expensive crude from alternative suppliers.
Sanctions as a Tool of Foreign Policy
Economic sanctions are coercive measures imposed by states or international organisations to alter the behaviour of a target state. UN Charter Chapter VII empowers the Security Council to impose binding sanctions, while unilateral sanctions (such as those by the US via OFAC) operate outside the UN framework but carry extraterritorial reach through the dominance of the US dollar in global trade.
- OFAC (Office of Foreign Assets Control) under US Treasury administers US sanctions programmes
- Sanctions tools include asset freezes, trade embargoes, financial restrictions, and secondary sanctions on third-country entities
- The EU adopted 15 packages of sanctions against Russia since February 2022
- Secondary sanctions create compliance pressure on countries like India even when they are not direct parties to the conflict
Connection to this news: India's reduction of Russian oil imports illustrates how secondary sanctions and diplomatic pressure from the US can alter bilateral trade patterns even between non-adversarial nations, highlighting the extraterritorial reach of American sanctions.
Key Facts & Data
- China's Russian oil imports (February 2026): ~2.07-2.08 million bpd (new record)
- India's Russian oil imports (February 2026): ~1.159 million bpd (two-year low)
- Discount on Russian Urals to China: $9-$11 below ICE Brent (lowest in years)
- G7 price cap on Russian crude: $60/barrel (since December 2022)
- India's crude oil import dependency: ~88-89% (FY 2024-25)
- India's total crude imports: 242.4 million tonnes (FY 2024-25)
- US tariff reduction on Indian goods: from 50% to 18% (February 2026)