In a bold move signaling the return of “America First” energy diplomacy, President Donald Trump’s administration unleashed a fresh barrage of sanctions this week targeting two of Russia’s largest oil producers: Rosneft and Lukoil. These giants handle roughly half of Moscow’s seaborne crude exports, amounting to about 3 million barrels per day out of Russia’s total 4 million bpd outflow. The Treasury Department’s action, announced on October 22, explicitly warns financial institutions and trading entities that dealings with these companies could expose them to U.S. penalties, effectively aiming to sever ties to the dollar-dominated global payment system.
But as Energy News Beat has long argued, these sanctions may not be the economic sledgehammer they’re billed as against Russia’s war chest—instead, they appear to be a calculated poker chip in Trump’s high-stakes trade negotiations with Asia’s energy-hungry giants, China and India.
With both nations already pivoting away from the U.S. petrodollar toward trades in yuan (RMB), rupees (INR), and rubles (RUB), and a flurry of trade deal announcements in the past three days, the question looms: Are these sanctions less about starving Putin and more about extracting concessions from Beijing and New Delhi?
The Sanctions Strike: Aimed at Russia’s “War ATM,” But Hitting Asian Wallets
The timing couldn’t be more provocative. Just months into his second term, Trump has escalated from restraint to restriction, blacklisting Rosneft and Lukoil in a bid to “choke off Kremlin revenues without causing a spike in global prices.”
This follows earlier packages under the EU’s 18th sanctions round in July, which slashed Russia’s crude price cap to $47.60 per barrel—yet export volumes have barely budged, underscoring a familiar refrain: Sanctions don’t work as intended.
eAsia feels the heat most acutely. China and India together gobble up five-sixths of Russia’s crude exports, with Beijing importing 2 million bpd and New Delhi 1.6 million bpd in September alone.
Immediate fallout? Indian refiners are scrutinizing paperwork to avoid Rosneft/Lukoil links, while Chinese buyers have paused orders, sending Brent crude up nearly 5% to $82 per barrel on October 23 amid supply jitters.
Yet analysts caution against overreaction: Historical precedents show sanctions leak like sieves, and Russia’s pivot to “shadow fleets” and discounted sales keeps the oil flowing.
Critics, including voices on platforms like Korybko’s Substack, frame this as outright “weaponization of energy geopolitics” to fracture BRICS cohesion—specifically the Russia-India-China (RIC) triangle Trump has railed against.
By dangling secondary sanctions on banks and tariffs as high as 55% on Chinese goods (and 50% on Indian), the U.S. exploits trade imbalances: China and India’s commerce with America dwarfs their Russian ties, making compliance a bitter but pragmatic pill.
Dedollarization Accelerates: Oil Trades Ditch the Greenback for RMB, INR, and RUB
Enter the petrodollar’s quiet funeral. For years, China and India have tested the waters of local-currency oil deals with Russia, but Washington’s latest salvo is pouring rocket fuel on the fire. Traders are now demanding yuan payments from Indian state refiners, citing smoother Russia-China ties and a desire to sidestep dollar scrutiny.
India, facing a $100 billion trade deficit with China and scant RMB reserves, has nonetheless inked deals to settle Russian crude in yuan since mid-October, slashing conversion costs and hedging against U.S. financial chokepoints.
This isn’t isolated. BRICS momentum is building: India-Russia oil payments in rupees, China-Brazil soybeans in yuan, and even whispers of ruble swaps for Urals crude.
Russia’s insistence on RMB over INR for Indian buys—echoed in viral clips from October 17—highlights the shift’s geopolitics: Why hold rupees when yuan’s global clout is surging?
As Irina Slav notes in Energy News Beat dispatches, these maneuvers don’t just evade sanctions; they erode the dollar’s monopoly, boosting RMB internationalization and leaving U.S. enforcers playing catch-up.
The irony? Sanctions meant to isolate Russia are supercharging dedollarization. Chinese firms, vowing protection from U.S. overreach, are doubling down on yuan-denominated futures on the Shanghai Exchange, while India’s yuan holdings—modest at 2.5% of reserves—could swell if trade pacts formalize.
Last Three Days’ Trade Bombshells: Leverage Unlocked?
The past 72 hours have turbocharged speculation that Trump’s sanctions are pure bargaining ammo. On October 22, reports broke of an impending U.S.-India trade pact: Major tariff cuts (from 50% to 15-16%) in exchange for New Delhi scaling back Russian oil buys by up to 20%—a direct nod to sanction compliance.
India’s top refiner confirmed the pivot, citing “business prudence” amid secondary sanction fears, potentially ending a U.S.-India impasse over discounted Urals crude.
Russia supplies a third of India’s imports; curbing it could jolt domestic prices but sweeten Modi’s tariff relief.Hot on its heels, October 25-26 saw U.S.-China talks yield a “trade-deal framework,” easing rare-earth export curbs and hinting at sanction delays for compliant firms—explicitly tying energy flows to broader concessions.
Oil prices ticked up 1.2% on October 27 as markets priced in reduced Russian supply risks, but analysts warn the real test is enforcement: Will Trump waive penalties for deal-makers, or double down?
For Trump, success hinges on these optics. Reduced RIC imports could “debunk the BRICS myth,” portraying fractured unity without derailing global supply—Russia’s war chest, padded by $300 billion in frozen assets and non-Western buyers, buys time.
Yet as Energy News Beat’s coverage affirms, even partial pullbacks won’t halt Moscow’s machine; they’ve only honed its resilience.
Sanctions as Negotiation Jujitsu: A Win for Trump, Headache for Energy Security?
Peel back the layers, and yes—these sanctions scream trade-tool. By ratcheting pressure on Russia’s “war ATM,” Trump exploits Asia’s vulnerability: Energy security trumps ideology, but not when tariffs threaten GDP.
China and India’s pre-sanction import dips (14% for India, 8% for China year-to-date) set the stage for “voluntary” compliance, averting a prisoner’s dilemma where one outmaneuvers the other in U.S. favor.
The rub? Enforcement softens in deal-making. Recent pacts suggest waivers for “friendly” trades, much like Iran’s oil-for-infrastructure swaps with China that thumb their nose at sanctions.
U.S. LNG exports could fill the void, but at a premium—ironic for a policy meant to punish Putin.In the end, Washington’s oil hammer may forge trade gold for Trump, but at Asia’s expense. Energy security rattles, dedollarization hums, and sanctions? As we’ve said 18 times before: They don’t work—not on Russia, anyway.
Watch the Xi-Trump summit; the real crude will flow from those handshakes. Watch how the sanctions are handled or enforced, and the only real advice we would give President Trump is to quit listening to the war mongers, as he is heading to devalue the US Dollar with overweaponization of the Dollar. The oil market is fungible, and we are seeing the “Glut on the Water” drying up; it was more like a Gavin Newsom oil spill when he took a swim in the bay.
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