Fact check: Can Russia rely on alternative oil suppliers like China and India?

1. Why yuan payments matter — a currency workaround with limits

A reported shift by Indian state refiners toward paying in Chinese yuan for Russian crude signals an important tactical adaptation to Western sanctions and helps Russia skirt dollar-based restrictions, while boosting the yuan’s international role ^{[1] [2]}. That move lowers specific transaction frictions and can stabilise flows in the short term, but it does not erase wider legal and banking risks tied to sanctions or secondary measures targeting entities that facilitate sanctioned trade. The effectiveness of yuan settlement depends on correspondent banking willingness, liquidity in yuan-denominated oil markets, and Beijing’s appetite to underwrite such arrangements at scale ^{[1] [2]}.

2. The Asia trio’s summit: closer ties, but strategic divergence persists

High-level engagement among Russia, China, and India at the SCO summit reflects a political tilt toward deeper cooperation on energy, with leaders linked by shared interest in securing supplies and resisting US-led sanctions pressure ^[5]. However, the summit-level political alignment masks operational divergence: China already dominates Russia’s crude and coal exports, India balances energy needs against diplomatic ties with the US, and each country pursues separate market and security priorities. Political signalling supports expanded trade, but bilateral commercial constraints and India’s sensitivity to Western pressure create practical limits to full reliance ^{[5] [6]}.

3. Market concentration: China already buys most Russian crude — that’s a double-edged sword

Analysts highlight that Russia is dependent on a narrow set of customers, with China as the dominant buyer of crude and coal, leaving Russia exposed if Chinese demand or policy shifts ^[3]. Concentration offers immediate substitution capacity — a few buyers can absorb volumes — but it increases geopolitical and economic vulnerability for Russia. If China consolidates purchases, Moscow gains short-term revenue stability; if Beijing recalibrates terms, volumes, or leverages purchases for concessions, Russia’s options shrink. The structural reality of concentrated demand shapes long-term reliability more than short-term transactional fixes ^[3].

4. India’s balancing act: cheap Russian oil versus geopolitical pressure

India’s continued purchases provide a second major outlet, but New Delhi manages a complex trade-off between energy affordability and diplomatic ties with the US and EU ^{[6] [4]}. Reports indicate potential EU rules on fuel refined from Russian crude and renewed US pressure could constrain India’s imports and financial arrangements, pushing some flows into alternative markets or the so-called shadow trade. India’s domestic refinery configurations, compliance with third-country rules, and fiscal interests in cheap feedstock shape whether it remains a dependable long-term buyer ^{[7] [6]}.

5. Western pressure, secondary sanctions risk, and market responses

Western efforts to discourage Asian purchases — including diplomatic lobbying and potential financial measures — could reduce India’s and others’ willingness to import Russian crude, forcing price discounts and rerouting into shadow markets ^{[8] [4]}. Such pressure may increase volumes available to China, but it also raises the cost of doing business for trading houses and refiners that rely on Western banking corridors or export markets. The net effect is an expansion of bilateral workarounds but also greater market fragmentation and legal risk for intermediaries and end-users ^{[8] [4]}.

6. Gas deals and the knock-on effects for oil flows to India

A recent Russia-China gas agreement may redirect Russian energy exports toward China, raising competitive pressure on India’s access to pipeline and seaborne supplies and potentially affecting price dynamics for Indian buyers ^[9]. If Moscow prioritises long-term gas contracts with Beijing, Indian importers could see reduced negotiating leverage or shifting freight and logistics patterns. That dynamic would not eliminate Russia’s ability to sell oil to India, but it complicates the calculus: energy contracts are interlinked, and preferential gas commitments can influence crude allocation and freight economics ^[9].

7. Bottom line — conditional reliability, not full substitution

Taken together, the evidence shows Russia can rely on China and India to take large volumes of oil in the near term, supported by currency workarounds and political alignment, but this reliance is conditional, commercially fragile, and geopolitically risky. China’s dominant buyer role concentrates risk, India’s policy is constrained by external pressure and domestic refinery economics, and Western measures raise legal and banking friction that can limit durable, large-scale substitution. The practical picture is therefore partial reliance with important caveats, not a seamless replacement of lost Western markets ^{[1] [3] [4]}.