Oil Market: China And India Help Russia Beat US And EU Sanctions

China and India have been buying more oil from Russia since the Russian-Ukraine war broke off, helping Moscow beat the U.S. and EU-led sanctions and taming market expectations for higher oil prices.

China imported $7.47 billion worth of Russian oil products in May, roughly $1 billion more than in April, according to data released by Beijing last week. That makes Russia China's largest oil supplier, ahead of Saudi Arabia.

Over the last three months, India's imports of Russian oil rose six-fold and China’s three-fold, respectively, compared to the same period last year, according to Voanews.com.

The Russia-Ukraine war has brought Russia closer to India and China, which have refused to join the U.S. and EU in sanctioning Russia, with Beijing going even further. It sees its relations with Moscow as the most strategic asset for China, which Washington cannot destroy by drawing a "wedge" between Moscow and Beijing over the Russia-Ukraine war, according to a Global Times editorial posted a couple of months ago.

That's why the surge in oil imports from Russia, which comes at deep discounts, could be seen as a big pay-off for China and India “soft” support for Russia’s invasion of Ukraine, and a way to beat the EU oil embargo.

"It's not a surprise that China has increased their purchases of Russian oil since the outbreak of the war with Ukraine, as Russia is offering heavy discounts in the wake of boycotts by Western European and other nations," retired Vice Admiral Robert B. Murrett, told International Business Times. "It is likely that such ties between Moscow and Beijing will continue at a high level, as Russia is forced to find alternative buyers and the impact of global sanctions continues to mount."

Still, Troy Vincent, Market Analyst at DTN, is skeptical about the numbers. "While China is set to continue to buy Russian oil, just as they've continued to buy sanctioned Iranian and Venezuelan barrels, it's important to take May's import data with a dose of reality," he told International Business Times. "The reality is that imports in May largely reflect loadings that took place in March, April, and early May. These trades and loadings mostly took place before the increasingly entangling European sanctions began to hit in mid-May and certainly do not reflect the impact of the shipping insurance ban."

He is also skeptical about "how much waterborne volume China will be able to import going forward in the second half of the year," especially if the global economy continues to slow down, depressing demand for oil.

At any rate, selling more oil to two big markets helps Russia make up for the lost revenues due to the U.S. and EU-led sanctions. And limits further gains in the oil market, which has been rallying ahead of the EU oil embargo on Russian oil.