The U.S. exemption from oil sanctions against Russia, recently announced, has provided greater assurance to Indian and Chinese refineries to continue purchasing Russian oil. This exemption allows them to keep buying economically viable Russian grades while maintaining alternative supply options to cope with potential changes.
Impact of the Exemption on the Oil Market
This exemption seems to maintain the flow of Russian oil to India and China rather than fundamentally changing it. While this action reduces the likelihood of sudden disruptions in global oil supply, the possibility of revoking the exemption means that political and commercial risks in purchasing and pricing decisions continue.
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Primacy Das, Executive Director of Oil Analytics at S&P Global Energy CERA, states: "For Indian and Chinese refineries, this exemption means more a reduction in uncertainty than a change in the crude oil supply picture." He added: "While Russian oil cargoes were already entering these markets, this exemption has alleviated immediate concerns and gives refineries greater confidence to continue purchasing grades that are economically sensible."
Oil Flows and Demand in Asia
India's demand for Russian crude oil will remain strong in the short term. However, refineries will continue to diversify their supply sources to hedge against potential future U.S. actions. According to S&P Global Commodities at Sea data, Russian crude oil shipments to India surged in the first half of 2026, rising from 1.17 million barrels per day in January to 2.43 million barrels per day in June.
Russian crude oil flows to China also remain strong and volatile. According to data from the General Administration of Customs, flows peaked at 2.72 million barrels per day in February before declining. However, China will continue to import Russian crude oil, even without the exemption under the Lindsey Graham law, unless Beijing decides to restrict access.
Russian oil supplies accounted for 30.9% of China's total crude oil imports in the first nine months of 2026. Analysts believe that new tariffs may reignite trade tensions with the U.S., while having little impact on China's purchases.
Ultimately, analysts believe that markets will likely view this exemption as a tactical respite rather than a permanent agreement. Therefore, buyers may take this opportunity to purchase, but long-term commitments will depend more on confidence in the stability of U.S. policies.
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