Chinese and Indian oil traders have played a critical role in the rapid growth of “dark fleet” tankers transporting Russian crude oil to Asia, circumventing Western sanctions. According to a recent report titled “BRICS+ Energy: Engine of the New World Order,” authored by Alexey Grivach, Deputy Head of the National Energy Security Fund, Russian oil exports have shifted dramatically from Europe to Asia in response to sanctions imposed by the G7.
The report, first cited by Russian media outlet TASS, reveals that India and China have been the primary buyers of Russian crude in 2023, contributing to the country’s pivot towards Asian markets. The report highlights that as G7 countries sought to cripple Russia’s economy and energy sector through sanctions, alternative trade mechanisms for transportation, insurance, and payments had to be developed swiftly.
Oil exports to India surged 18-fold, from 4.5 million tons in 2021 to 82 million tons in 2023. Similarly, exports to China increased by a third, from 80 million tons to 107 million tons. As a result, 78% of Russia’s crude oil exports were directed to these two BRICS nations, compared to just 32% in 2021.
Robin Brooks, a senior fellow at the Brookings Institution, noted on social media platform X that India’s imports of Russian oil skyrocketed by 900% compared to pre-invasion levels. Much of this crude is sent to India for refining and then re-exported to Europe. Brooks emphasized that while this practice would be acceptable if conducted using Western-owned oil tankers in compliance with G7 price caps, much of it is carried out by vessels in the shadow fleet, thereby bolstering Russia’s economy.
Energy market expert Anas Alhajji echoed these concerns, drawing attention to the steady flow of Russian crude oil through strategic shipping routes such as the Red Sea and the Bab Al-Mandab Strait near Yemen. “They are all carrying Russian Urals crude!” Alhajji remarked on X, referencing the significant number of oil tankers moving Russian oil.
The shadow fleet, which consists of oil tankers operated by countries under U.S. sanctions, is now a key player in facilitating the movement of Russian crude. Data from TankerTrackers Web shows that this clandestine global network of tankers has been effectively circumventing Western restrictions.
India has emerged as a pivotal actor in this oil trade, utilizing its vast refinery capacity to process Russian crude and export refined products to the West. This activity undermines the effectiveness of G7 sanctions. Earlier this year, analysts pointed out how India’s role in refining Russian oil is eroding the impact of these sanctions.
In July, Brooks highlighted how India’s refining capacity has effectively made it a processing hub for Russian oil. He stressed that while the trade could comply with sanctions if Russian crude were transported on Western ships adhering to the G7 price cap, a significant portion of this oil is transported by vessels in Putin’s shadow fleet, effectively financing Russia’s ongoing invasion of Ukraine.
The broader implication of these developments is the weakening of Western sanctions, which has inadvertently accelerated the trend towards de-dollarization. The shift in global oil trade patterns, driven by sanctions, is gradually eroding the U.S. dollar’s dominance in international trade. The long-term consequence could be a substantial decline in the dollar’s hegemonic status.
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