The debate over how to deal with Russia’s oil exports and the role of China and India in keeping Moscow’s energy revenue flowing has resurfaced after comments from U.S. Treasury Secretary Bessent. Speaking on the sidelines of international economic discussions, the Treasury chief made it clear that the United States will not act unilaterally in imposing tariffs on Chinese imports of Russian oil. Instead, Washington is insisting that Europe must take the lead if such a policy is to move forward.

Background: Russia’s Oil Revenue Lifeline

Since the beginning of the conflict in Ukraine, Western governments have imposed a series of sanctions on Russia. These measures have targeted banking, finance, technology exports, and direct energy trade with the European Union. However, despite these sanctions, Russia has found new lifelines through redirecting oil exports toward Asia, particularly to China and India.

Both countries have dramatically increased their intake of Russian crude since 2022, often purchasing at a discounted rate compared to global benchmarks. For Russia, this has provided a steady stream of income to sustain its war efforts and cushion the blow of Western restrictions.

Western officials, particularly in the U.S. Treasury Department, have long argued that curbing this revenue is essential to weakening Moscow’s economic resilience. The question has always been how to do so without causing a global oil price shock.

Bessent’s Position: No Lone Moves by Washington

In his statement, Treasury Secretary Bessent emphasised that the U.S. will not independently impose tariffs on China’s Russian oil imports. Instead, he said, the U.S. will only move forward if European countries adopt similar measures first.

This cautious approach signals Washington’s desire to avoid being isolated in its sanctions strategy. Acting alone could risk straining U.S.-China trade relations further without significantly cutting Russia’s oil revenue. If Europe joins in, however, the combined pressure of Western economies could have a far stronger impact on Russia’s export channels.

Bessent also called on European nations to extend their sanctions regime to include tariffs on Russian oil imports that are routed to or refined by China and India. He argued that without collective action, Russia will continue to exploit divisions between Western allies.

The Role of China and India

China and India have become two of the largest buyers of Russian crude oil. For China, Russian oil fits its strategy of securing long-term energy supplies at competitive prices, while India has justified its purchases on the grounds of securing affordable energy for its population.

From the Western perspective, however, these imports are undermining the effectiveness of sanctions. The G7 price cap mechanism on Russian oil, introduced in 2022, has had limited success in restraining Russia’s revenue, as both China and India often bypass these restrictions.

By calling for tariffs, Washington and its allies aim to increase the cost of Russian oil imports for these countries, potentially reducing the attractiveness of buying from Moscow.

Europe’s Dilemma

For Europe, the decision is complicated. The EU has already taken major steps by banning direct Russian crude imports, but extending tariffs to secondary buyers like China and India could risk diplomatic fallout. European economies also remain highly sensitive to energy price fluctuations, and any move that could spike global oil costs is approached with extreme caution.

European officials have so far not committed to Bessent’s proposal. While some member states support tightening the noose on Russia, others fear unintended consequences for energy stability and inflation.

Strategic Considerations for the U.S.

Bessent’s remarks underline a strategic balancing act by the U.S.:

• On one hand, Washington wants to maintain pressure on Moscow’s oil revenues to weaken Russia’s war economy.

• On the other, it does not want to damage its own economic stability or risk alienating partners like India, which it sees as a crucial ally in the Indo-Pacific against China.

The insistence that Europe must act first reflects a recognition that collective action amplifies the effectiveness of sanctions while also sharing the political and economic risks.

Impact on Global Oil Markets

If Europe and the U.S. were to move forward with coordinated tariffs on China and India’s Russian oil imports, the global oil market could face significant disruptions. Russian oil might be forced to sell at even deeper discounts, potentially reducing Moscow’s revenue stream.

At the same time, however, China and India could respond by seeking to negotiate even more favourable terms with Russia, or by turning to alternative suppliers in the Middle East and Africa. The result could be a complex reshuffling of energy trade flows.

Oil analysts warn that any tariff measure must be carefully calibrated to avoid a sudden surge in global prices, which would not only hurt consumers but also risk political backlash in both Europe and the U.S.

Conclusion

The statement by Treasury Secretary Bessent is a clear signal that the United States is unwilling to act alone in imposing tariffs on Russian oil imports handled by China and India. Instead, Washington is looking to Europe for leadership in order to ensure a unified front.

This cautious approach highlights the fragile balance in global sanctions policy—seeking to punish Russia without destabilising energy markets or alienating strategic partners. For now, the ball lies in Europe’s court, as its decision will determine whether a broader coalition can emerge to further cut off Russia’s oil revenue.

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