Washington’s latest oil sanctions are reshaping how India and China conduct energy trade and international payments, with both countries accelerating moves away from the US dollar.
US Sanctions Spark Global Shift
In October 2025, President Donald Trump enacted sweeping sanctions targeting Russia’s largest oil companies, Rosneft and Lukoil, in response to the war in Ukraine. Unlike previous measures, these new sanctions block Russian crude purchases entirely for US-linked entities, regardless of price, replacing the earlier $60 price cap strategy. As a result, top customers like India and China—importing around 3.6 million barrels daily combined—face urgent supply and payment challenges as Washington pressures Moscow’s revenue channels.cnbc+1
India and China’s Dollar Dilemma
The comprehensive ban is pushing India and China to cut back on dollar-centric transactions. Both nations have ramped up deals using alternative currencies, notably the Chinese yuan, UAE dirham, and Indian rupee, following Moscow’s request for non-dollar payments due to the threat of US secondary sanctions on banks and intermediaries. These bilateral agreements are designed to cushion against dollar volatility and keep critical energy supplies flowing despite mounting geopolitical risks.reuters+1
Strategic and Economic Implications
The de-dollarization trend, driven by the oil sanctions, reflects a broader push against US financial dominance in global trade. While this shift helps India and China secure strategic energy needs, it also signals an evolving world order—where major economies are willing to bypass dollar systems in reaction to Washington’s foreign policy tools. Analysts warn that while immediate supply disruptions are unlikely, longer-term impacts could destabilize oil markets and challenge the dollar’s supremacy.bushcenter+2
What’s Next?
As secondary sanctions loom and oil market dynamics evolve, observers believe further payment system innovation and currency swaps may accelerate. The situation remains fluid, depending on potential negotiations between Washington and Moscow, and ongoing responses from India, China, and other global players.cnbc+1
