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On 25 October 2025, the US imposed sanctions on the two Russian oil companies, Rosneft and Lukoil, from 21 November 2025. The other two large Russian companies, Gazprom Neft and Surgutneftegaz, had already been sanctioned in January 2025. These punitive actions include both primary and secondary sanctions.
Primary sanctions apply directly to entities and individuals within the sanctioning country’s legal jurisdiction. When applied to companies or businesses, they include entities in which they hold a direct or indirect stake of 50% or more. Their assets within the jurisdiction of the sanctioning country stand frozen, and all individuals and entities are barred from engaging in business with these companies.
On the face of it, such sanctions should not impact other nations or businesses. However, that is not true. There are secondary sanctions that apply to other regimes and business entities outside the jurisdiction of the country imposing the sanctions. In the current case, it means penalties on non-U.S. institutions that engage in trade or any transactions with the targeted Russian entities. This is how these sanctions impact India and China, including their oil companies.
The sanctions have given rise to a clandestine network, commonly referred to as ‘Shadow fleet tankers’, which often comes into play to circumvent the sanctions. This phenomenon has grown significantly since 2022 after the invasion of Ukraine, and helps sanctioned countries in selling oil outside of the accepted regulations. These tankers avoid detection on the high seas by manipulating their Automatic Identification Systems (going dark), sending false GPS signals (spoofing), changing their country of registration flag (flag hopping), and concealing ownership through shell companies. At times, they resort to transferring oil from a sanctioned tanker to another vessel in unmonitored international waters. In doing so, they even resort to mixing consignments to avoid detection of the source of the oil.
In 2024, total trade between Russia and the USA was about $5.2 billion. American imports account for $3 billion ($30 billion in 2021), and exports are only $526 million ($4.5 billion in 2022). Imports mainly include rare metals like palladium, enriched uranium, and other radioactive materials for their semiconductor, communication, and defence sectors. Exports are limited to pharmaceuticals and key components for medical, optical, and photo equipment. As of 2022, the USA has banned all oil imports from Russia. The USA’s sanctions policy remains selective as it always ensures that America’s critical needs and interests are always protected. However, a similar logic for other countries, like India, is blasphemy in America’s view.
In 2024, the EU’s bilateral trade with Russia was approximately $70.3 billion. In 2021, it was over $300 billion. The main imports from Russia are mineral fuels and natural gas, while exports include pharmaceuticals, chemicals, optical and photo equipment, medical equipment, and special machinery. In the last three years, EU exports to Russia have fallen by 61% and imports from Russia by 89%. The EU has always had a trade deficit with Russia, but it now has a small trade surplus.
What are the impacts of such sanctions on Russia? One, there is a major impact on the country’s financial sector as its foreign currency reserves are frozen and it is cut off from the SWIFT international payment system. Two, Russia’s trade, both exports and imports, is restricted. Third, reduced gas and oil imports by the EU, and the enforcement of an oil price cap by the G7. Four, freezing of assets of Russian companies abroad, as well as restrictions on the travel of their personnel. Five, an adverse impact on the Russian war effort due to reduced revenues.
India’s oil imports from Russia tell an interesting story. In the year FY 21-22, India’s imports from Russia were less than 1% of its total needs. In FY 24-25, at its peak, this figure jumped to nearly 40%. Currently, in FY 25-26, it is 34% and is valued at about $45 billion. The reduced imports are due to sanctions and lower discounts. India’s savings on its oil imports are estimated to be $16 billion over the last three years (average $5.3 billion/year). Yearly, this figure is less than 0.15% of the nation’s GDP, but 1.45 times the total budget of the state of Delhi for FY 25-26, or 24% of the total defence capital outlay for FY 25-26. So, for India, it is a question
Next, what will be the major impacts of sanctions on India? First, Indian refiners may be forced to cut oil imports from Russia and pay higher prices to other suppliers. They will have to scout for new export markets. The impact on the Nayara refinery in Gujarat, partly owned by Rosneft, would be serious. Second, India will have to forego the savings that it makes by buying Russian oil at a discounted price. Third, higher local petroleum product prices could lead to inflation, which is currently under control. Fourth, refiners will need to recalibrate their refining processes for crude from other sources. This will impact their profitability. Fifth, the strategic implications of balancing ties with Russia amid pressure from the USA and the EU.
The legal position on imposing sanctions under international law is complex, and a lot depends on whether the sanctions are multilateral, imposed by the United Nations (UN) Security Council, or unilateral, imposed by a single state or regional bloc. Under Chapter VII, the UN Security Council (UNSC) has the authority to authorize sanctions when there is a determination of a ‘threat to the peace, breach of the peace, or act of aggression’. Article 41 of the UN Charter allows the Security Council to impose “measures not involving the use of armed force” to implement its decisions. These can include interrupting economic relations, communications, and diplomatic ties. Member states are legally bound to follow the decisions of the UNSC. But the question here is, how can an individual nation, or a group of nations, do so?
Unilateral sanctions may sometimes be justified as “countermeasures” under customary international law, which are non-forcible responses to a state’s internationally wrongful act. However, these must be proportional, temporary, reversible, and not violate human rights or jus cogens. Opponents contend that unilateral sanctions, particularly those with extraterritorial effects, interfere with the internal affairs of other states, violating the principle of sovereign equality enshrined in the UN Charter. Developing nations in particular argue that unilateral economic sanctions harm their right to economic development. There is a UN General Assembly resolution urging states not to recognize such measures, reflecting international opposition. Additionally, there are valid humanitarian concerns when such unilateral sanctions are imposed.
The USA’s main objective in imposing these sanctions is to dent Russia’s war effort by hurting its economy. A war that the USA and NATO literally invited by trying to induct Ukraine into the latter. In the last three years, since the war broke out, Ukraine has become a live testing ground for many US weapons and responses. A misplaced fear of a likely Russian offensive against the European nations suits American interests by making Europe more compliant to American hegemony. American and European arms manufacturers are thriving because of this war, as not only is Ukraine buying them, but also the rest of Europe, to strengthen NATO. The war is taking a heavy toll on the Russian economy, and its development is being pegged back. This is music for American ears.
As far as India and China are concerned, the USA accuses both of funding the Ukraine war by buying Russian oil. However, a dispassionate and honest analysis says something else. India’s annual oil imports from Russia are $45 billion, while China’s are about $55 billion. EU’s annual trade with Russia stands at $70 billion, which includes about $36 billion in imports. Corresponding figures for the USA are $5.6 billion and $3 billion, respectively.
The moot question is, if the Indian and Chinese oil imports fund the Russian war, what does the $75 billion trade with the EU and the USA do? Are some dollars earned from countries like India different than those from the USA or the EU? What about the billions of dollars earned by American companies for America because of the war that are drenched in the blood of Ukrainian and Russian soldiers and civilians? The logic of American accusations against India is indeed so strange that it defies all logic. It is a logic drunk on power and driven by the selfish interests of the world’s most powerful and rich nation. Sorry, Mr Trump, the unmelodic and extortionate notes of your trumpet need retuning.
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