China and India Looking to Russia for Oil: Can They Deliver?

As Middle East supply risks escalate—with threats to the Bab el-Mandeb Strait adding to existing pressures on key chokepoints—China and India are turning aggressively toward Russian crude. Analysts had long flagged that a rebound in Chinese buying or a closure/disruption of Bab el-Mandeb could drive oil prices higher. Both factors are now in play, yet Russia’s ability to fully meet rising Asian demand is under severe strain from sustained Ukrainian drone strikes on its export infrastructure.

On July 24, 2026, Bloomberg reported that Russia’s top Black Sea oil port has halted loadings amid safety fears. The Sheskharis oil terminal at Novorossiysk—the country’s largest Black Sea crude export facility—has not loaded crude cargoes since early Tuesday, July 21. The pause coincides with a surge in Ukrainian drone attacks in the area, confirmed via shipping data, satellite imagery, and vessel tracking.

Sheskharis typically handles around 700,000 barrels per day (bpd) of crude, primarily Urals and related grades destined for markets including India and Turkey. Previous drone strikes in 2025 and earlier in 2026 had already damaged berths, forced temporary suspensions, and left major loading points operating at reduced capacity or idle for extended periods.

Ukraine’s Campaign Against Russian Oil Infrastructure

Ukrainian long-range drone and missile strikes have systematically targeted Russian energy assets throughout 2026. Hits on Black Sea and Sea of Azov ports, oil depots, logistics hubs, shadow fleet tankers, Baltic terminals (Ust-Luga and Primorsk), and refineries have disrupted both exports and domestic processing. Refining capacity has been pushed to multi-year lows in some assessments, contributing to internal fuel shortages and export restrictions on certain products. Attacks on vessels have further complicated the shadow fleet operations that Russia relies on to move sanctioned barrels.

Russia’s seaborne crude exports have nonetheless shown resilience at times, averaging near 3.8–4.1 million bpd in recent months, with volumes occasionally hitting wartime highs even as revenues lagged due to discounts and logistics costs. However, the Black Sea route—critical for shorter-haul deliveries to India and Mediterranean buyers—remains particularly vulnerable. Diversions to other ports are possible but face bottlenecks.

China’s Rush for ESPO and India’s Record Buying

Chinese refiners have accelerated purchases of Russia’s ESPO crude from the Far East port of Kozmino. Reports indicate they have secured all available August cargoes weeks earlier than usual, as Red Sea tanker attacks and broader Middle East risks intensified. This buying pressure has narrowed the ESPO discount to ICE Brent to just $1 per barrel, from $3–$4 two weeks prior. The short voyage from Kozmino to China’s east coast (about one week) makes it an attractive alternative to longer, riskier Middle Eastern routes.

India, meanwhile, has maintained near-record imports of Russian crude. Ship-tracking data showed approximately 2.70 million bpd in June 2026 (more than half of India’s total imports) and around 2.45 million bpd so far in July, even after the expiration of certain U.S. sanctions waivers. Russia has supplied the bulk of India’s crude basket in recent months as refiners sought alternatives amid Hormuz and Red Sea uncertainties.

Export Capacity Constraints: Can Russia Deliver?

Russia’s Pacific route via the Eastern Siberia–Pacific Ocean (ESPO) pipeline and Kozmino terminal offers a more secure path to China, with loadings historically in the 700,000–900,000 bpd range and some headroom for increases via pipeline and rail. Direct pipeline deliveries to China provide additional volume insulated from maritime risks. However, overall Far East capacity is finite and cannot fully offset Black Sea shortfalls or meet simultaneous surges from both China and India.

Black Sea disruptions directly threaten the Urals volumes that India has been absorbing in large quantities. While Russia can attempt to reroute crude northward or eastward, pipeline and port constraints, combined with ongoing safety risks to tankers and terminals, limit flexibility. Shadow fleet availability and insurance challenges compound the problem. Previous temporary halts at Novorossiysk have removed hundreds of thousands of barrels per day from the market for days or longer.

Oil Market Implications

Analysts had predicted upward pressure on prices from stronger Chinese demand or Bab el-Mandeb disruptions. Roughly 5–6 million bpd of crude currently transits Bab el-Mandeb toward Asia. A full or effective closure by Houthi forces would force costly Cape of Good Hope diversions, raise freight and insurance costs, and tighten supplies—potentially pushing prices significantly higher (some estimates pointed to $115–$120 or beyond in severe scenarios).

With China already securing Russian barrels and India continuing heavy purchases, any sustained reduction in Russian export capacity amplifies the tightness. Brent crude has traded in the mid-to-high $90s recently (around $96–$100 range on July 24), up sharply over the past month amid the broader geopolitical backdrop, though daily moves reflect shifting peace-talk hopes and other factors.

Persistent Ukrainian strikes mean Russia may struggle to ramp deliveries reliably even as Asian demand for its discounted crude rises. The result is a market facing potential shortfalls precisely when alternatives from the Middle East are most constrained. Buyers in China and India can secure some volumes—particularly via the Pacific for China—but full delivery at desired levels faces real logistical and security hurdles. The coming weeks of loadings data from Kozmino, residual Black Sea activity, and any further drone incidents will clarify how much Russia can actually supply.

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