BRICS: India and China absorb 78% of Russian oil

In 2023, 78% of Russian crude oil exports were directed to two Asian giants: India and China. A radical redistribution which contrasts sharply with the situation in 2021, where these two nations only absorbed 32% of Russian energy flows. Faced with Western sanctions which aim to strangle its energy sector, Russia is reinventing its commercial circuits with its BRICS partners. This strategic realignment along the Asian axis reflects a major shift in global energy dynamics, leading the BRICS bloc to accelerate its efforts to break away from the Western-dominated financial system.

Russia strengthens energy ties with India and China

Russia has drastically reoriented its oil exports in 2023, in direct response to sanctions imposed by G7 countries. According to a report from the Valdai International Discussion Club, 78% of Russian oil exports now go to India and China, both members of the BRICS alliance, compared to only 32% in 2021. “When G7 countries decided to crush the Russian economy and its energy sector with sanctions, alternative trade mechanisms had to be created urgently,” declared Alexey Grivach, author of the report and deputy director of the Russian National Energy Security Fund. This redistribution of trade flows has seen Russian oil deliveries to India increase 18-fold in just two years, from 4.5 million tonnes in 2021 to 82 million tonnes in 2023. For its part, China also strengthened its position by absorbing 107 million tonnes of Russian oil this year, compared to 80 million in 2021.

This reorientation is not the result of chance. With sanctions targeting energy transactions via Western payment systems, Russia has had to urgently develop alternative solutions to guarantee the continuity of its trade with its Asian allies. Shipping routes, insurance and payments have all been reshaped to circumvent Western restrictions, marking a reorganization of the global oil trade. In this context, India and China position themselves as essential partners of Russia.

BRICS and the transformation of energy payment systems

In parallel with this redistribution of trade flows, the BRICS are moving forward on another strategic front: the overhaul of payment systems for energy resources. This process was accelerated by the exclusion of Russia from the American and European financial systems due to sanctions. In response, pilot agreements have been set up between Saudi Arabia and China, allowing the sale of oil in yuan rather than dollars. This initiative, although recent, illustrates the BRICS desire to “systematize a secure payment framework that is not vulnerable to unilateral sanctions”, as indicated in the Valdai report. The abandonment of the 50-year agreement between the United States and Saudi Arabia, which linked oil transactions to the dollar, constitutes a historic break with the hegemony of the greenback in international energy trade.

This realignment of payment systems goes well beyond Russia. It foreshadows an overhaul of global trade mechanisms, as BRICS seek to protect themselves from Western financial interference. If these initiatives succeed, they could constitute a decisive step for the future of global economic relations. Thus, the bloc could soon form a consortium capable of rewriting the rules of energy trade.

This reorientation of oil flows and payment systems between Russia and its BRICS partners could herald a major transformation in the global energy order. If Western sanctions have forced Russia to accelerate its relations with India and China, they have also encouraged the BRICS to explore new financial alternatives. The development of these payment systems could allow these countries to circumvent future sanctions, but also redefine the place of the dollar in global trade.