China takes advantage of sanctions: how Beijing buys Russian energy at discounted prices and prepares for the future

In a context of growing geopolitical tensions, China is strengthening its energy partnership with Russia, openly defying the sanctions imposed by the United States and its allies. This strategy is not limited to buying LNG from sanctioned projects like Arctic LNG 2, but also includes an aggressive policy of stockpiling crude oil. Taking advantage of competitive prices, Beijing is filling its reserves in preparation for potential future supply disruptions, while data from the Centre for Research on Energy and Clean Air (CREA) confirms its role as the world's leading buyer of Russian fossil fuels.

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The Arctic LNG 2 Shipment Marks a New Phase

China is significantly increasing its fossil fuel purchases from Russia, openly defying sanctions imposed by the United States, the European Union, and the United Kingdom. On September 12, the sanctioned Russian tanker Buran docked at the Beihai LNG terminal in China, unloading a cargo of about 166,000 cubic meters of liquefied natural gas (LNG). This is the fourth cargo received in just over two weeks from the Russian project Arctic LNG 2, a flagship facility operated by Novatek that struggled to find buyers for over a year due to severe Western restrictions.

The arrival of these LNG cargoes, following the plant's reactivation in August, shows that Russia has decided to proceed with exports, testing the resolve of the United States to impose secondary sanctions on Chinese customers. Lin Jian, a spokesperson for the Chinese Ministry of Foreign Affairs, reiterated Beijing's position, calling energy cooperation with Russia "legitimate" and warning that China will take "decisive countermeasures" to defend its interests if they are harmed. This diplomatic and commercial stance highlights a growing boldness by China and Russia in navigating and bypassing the Western sanctions regime.

China Stockpiles Crude Oil: A Strategy for Energy Security

In addition to importing LNG from Russia, China is implementing an aggressive crude oil stockpiling strategy. Official Chinese data indicates that in August, the country imported and produced about 1 million barrels per day more crude than its refineries processed. According to analysts, this surplus is almost entirely destined for storage facilities, for both strategic and commercial reserves.

This massive stockpiling is driven by two motivations:

1. Advantageous Prices: Taking advantage of this year's relatively low oil prices to fill reserves at competitive costs.

2. Energy Security: Strengthening its reserves in a context of rising geopolitical tensions and the risk of future secondary sanctions that could affect its supply.

Analysts predict this trend will continue, with Goldman Sachs and Gunvor estimating that China could add about 500,000 barrels per day to its stockpiles over the coming quarters, extending the accumulation until 2026. The primary goal is not to support the oil market, but to prepare for an uncertain future and strengthen its energy security in case of supply disruptions.

Data and Trends: China's Dominant Role in Russian Energy Trade

A recent analysis by the Centre for Research on Energy and Clean Air (CREA) provides a detailed picture of Russia's fossil fuel export trends and the crucial role played by China.

Key data from August 2025:

• Declining Revenue: Russia's monthly fossil fuel export revenues fell for the third consecutive month, settling at 564 million euros per day (-2% month-on-month).

• China's Prominence: China confirmed its position as the world's leading buyer, accounting for 40% (5.7 billion euros) of Russia's total export revenues from the top five importers. Crude oil made up the largest share of Chinese purchases at 58%, followed by coal (15%), pipeline gas (12%), and petroleum products (10%).

• India and Turkey: India is the second-largest buyer at 3.6 billion euros, dominated by crude oil (78%). Turkey follows in third place with 3 billion euros, with natural gas and petroleum products as its main imports.

• European Dependence: The EU remains a significant buyer, especially for LNG and pipeline gas, importing a total of 1.2 billion euros. Hungary, Slovakia, and France are the largest European importers, benefiting in part from exemptions or LNG flows.

• Coal Imports: Russian coal exports reached their highest levels of 2025, driven by a 36% increase in purchases from South Korea.

• The "Shadow Fleet": In August, the share of Russian oil transported by tankers owned or insured by G7+ countries fell to 53%, suggesting a renewed reliance on the "shadow fleet." About a quarter of the oil transported by these "shadow" vessels was on sanctioned tankers.

Attacks on Energy Infrastructure: The Impact of Ukrainian Drones

The Ukrainian drone campaign is having a significant impact on Russia's refining capacity. It's estimated that this campaign has destroyed about 17% of Russia's refining capacity, causing shortages and a surge in fuel prices across the country. This detail highlights how Russia's economic difficulties don't just stem from sanctions, but also from the direct effects of the conflict on its territory, undermining one of its main sources of wealth and internal stability.

Alternative Payment Mechanisms: Barter and New Infrastructure

Western sanctions have pushed Russia to explore alternative payment mechanisms, including the reintroduction of barter. Because Chinese banks fear secondary sanctions and refuse to process transactions in dollars and euros with Russia, more and more trade is happening through the direct exchange of goods. Commercial sources have confirmed in-kind transactions like the exchange of Chinese cars for Russian grain, or Chinese machinery and building materials for Russian flaxseed and metals. The Russian Ministry of Economic Development even proposed creating an official platform for barter, demonstrating how this system is becoming a concrete solution to circumvent financial restrictions.

In a more strategic move, Moscow and Beijing are collaborating to create a new joint clearing infrastructure. This project, with China in a central role, aims to bypass the SWIFT system and Western restrictions. The goal is to facilitate cross-border transactions in currencies other than the dollar—primarily the ruble and yuan—offering an alternative to Western custody systems like Euroclear and Clearstream, which have frozen about 210 billion euros in Russian assets. This platform would not only reduce Russia's dependence on the Western financial system but would also allow sanctioned entities to access financial services and bilateral investments, promoting greater global economic multipolarity.

China Opposes G7 and NATO Tariffs: "An Act of Bullying"

Beijing has responded firmly to the U.S. request for G7 and NATO countries to impose 50% to 100% tariffs on Chinese imports of Russian oil. A spokesperson for the Chinese Ministry of Commerce stated that China is firmly opposed to any trade and economic restrictions based on the "Russian issue," calling Washington's move a "typical example of unilateral bullying and economic coercion."

According to the spokesperson, such a move would seriously violate the consensus reached by the two countries' leaders and would have severe repercussions for global trade and supply chains. China reiterated that it will take all necessary measures to protect its interests and called on the United States to act cautiously, preferring equal dialogue to resolve trade differences. This diplomatic clash highlights Beijing's growing determination to defend its "legitimate cooperation" with Russia, even at the cost of escalating tensions with Western powers.

Reflections and Implications

The effectiveness of Western sanctions against Russia is proving to be a double-edged sword. While they have imposed significant costs on the Russian economy by reducing its fossil fuel export revenues, they have also accelerated Moscow's "de-dollarization" process and its move away from the Western financial system.

In response, Russia has found an almost irreplaceable source of demand in the Asian market, led by China and India. These countries, not aligned with the sanctions, have benefited from discounted prices and have ensured a vital flow of revenue for Russia. Beijing's role, in particular, is not just that of a buyer of cheap energy, but also a strategic partner that provides an escape route from the Western-dominated global financial system, through mechanisms like barter and the creation of alternative clearing infrastructures.

Meanwhile, within the NATO bloc, deep divisions persist. Currently, only three nations—Hungary, Slovakia, and Turkey—continue to import Russian crude oil. Turkey is the largest, benefiting from discounted oil, refining it, and selling petroleum products to Europe. The growing political pressure, like that from President Donald Trump, who has proposed secondary tariffs not only for China and India but also for NATO nations that trade with Russia, could lead to further tensions. This shows how the goal of "forcing the Kremlin into substantial negotiations" through economic isolation is failing due to the fragmentation of the Western front and the rise of an economic and financial alternative.

This scenario highlights the complexity of current economic and geopolitical dynamics. Sanctions, while aiming to isolate Moscow, are in fact pushing Russia into a closer economic and financial alliance with China, accelerating the formation of a non-Western bloc that seeks to redefine the balances of global trade and finance.