India is now the world’s biggest buyer of Russian crude. In January it imported 1.3 million barrels per day — the highest rate ever recorded, according to S&P Global’s Commodities at Sea database. That single number explains how the global oil trade has been turned inside out since Russia invaded Ukraine one year ago.
Before the war, Europe took 750,000 barrels per day of Russian diesel. Now that diesel comes from India and the Middle East. Russian naphtha and fuel oil sail east to Asia. The trade routes have flipped. Moscow’s seaborne exports have actually hit record volumes — just headed in the opposite direction.
Western sanctions drove this. The G7 price-cap regime, tightened on February 3, sets a $100 per barrel ceiling for Russian diesel and kerosene and $45 per barrel for residual fuel oil. A senior U.S. Treasury official, speaking on condition of anonymity because he was not authorised to talk publicly, called the caps “working exactly as designed: Russian barrels keep flowing but at prices that erode the Kremlin’s war chest.”
Moscow’s response was a unilateral 500,000 barrels per day production cut, announced for March. Yet external surveys show Russia still pumping close to 10 million barrels per day — roughly what it pumped before the war. The cut may be more signal than substance.
Dated Brent crude is set to drift near $80 a barrel through June 2023, traders and analysts told S&P Global Commodities Insight on March 1. Swollen inventories are cushioning the market from the shock of the invasion. The second half of the year could look different. A lift toward $85-$90 is expected once Chinese travel and factory demand rebound after Beijing’s sudden exit from zero-COVID controls.
China’s recovery is already showing. Chinese refiners processed 14.1 million barrels per day in January — the fastest pace since last summer. Domestic flights jumped 89% month on month. “We see gasoline demand already above December 2021 levels; the recovery is running two months ahead of our base case,” JLC analyst Li Yan told S&P Global. Beijing’s private “teapot” refiners sold heavily into the market.
The picture is this: Russia still sells oil, just to different buyers at discounted prices. Europe still buys diesel, just from different suppliers at higher costs. China’s return to the market could tighten supply later this year. The war’s one-year anniversary finds global oil flows fundamentally redrawn, with inventories high, prices muted, and the real test yet to come when Chinese demand fully revives.
No one is predicting a return to the old trade patterns. The rerouting is now structural. India’s record imports are not a one-month blip. Europe’s shift to Middle Eastern and Indian diesel is not temporary. The G7 price caps, whatever their flaws, have created a two-tier market — one price for Russian oil, another for everyone else’s. And Moscow’s production cut, so far, has not moved the needle.
The second half of 2023 will tell whether $80 crude holds or gives way to $90. For now, the market is waiting.
