DYNAMICS AND GEOECONOMIC SHIFTS UNDER SANCTIONS: RUSSIA`S CRUDE OIL EXPORTS TO CHINA (2014-2023)

ABSTRACT

The article examines transformations in the structure and dynamics of Russian crude oil and other energy exports to China from 2014-2023 against the backdrop of increasing sanctions pressure. The study focuses on analyzing key trends: the reorientation of supplies to Asian markets, diversification of export commodities (oil, coal, natural gas and electricity) and changes in pricing mechanisms. Drawing on Chinese customs and international energy databases (WITS, CEIC, Enerdata), the research demonstrates how Russia has strengthened its position as China`s leading energy supplier, increasing its share in Chinese oil imports from 9% to 18%. The study pays particular attention to the consequences of the 2022 sanctions and associated risks, including price volatility, China`s energy transition and geopolitical instability.

АННОТАЦИЯ

В статье исследуются трансформации структуры и динамики экспорта российской нефти и других энергоресурсов в Китай в период с 2014 по 2023 год на фоне усиления санкционного давления. Основное внимание уделено анализу ключевых тенденций: переориентации поставок на азиатский рынок, диверсификации товарной структуры (нефть, уголь, газ, электроэнергия) и изменению ценовых механизмов. На основе данных таможенной статистики Китая и международных энергетических баз (WITS, CEIC, Enerdata) показано, что Россия укрепила позицию крупнейшего поставщика энергоносителей в КНР, увеличив долю в китайском импорте нефти с 9% до 18%. В исследовании особо рассматриваются последствия санкций 2022 года и связанные с ними риски, включая колебание цен, энергетический переход Китая и геополитическую нестабильность.

Keywords: Russia, China, oil exports, energy trade, sanctions, supply diversification, “Power of Siberia”.

Ключевые слова: Россия, Китай, экспорт нефти, энергетическая торговля, санкции, диверсификация поставок, «Сила Сибири».

Introduction

In the context of increasing sanctions pressure and the transformation of global energy markets, Russia has faced growing challenges in adapting its foreign economic strategy. Over the past decade, China has emerged as Russia`s main trading partner, particularly for energy commodities, while simultaneously reinforcing its position as the world`s largest economy with consistently rising energy demand. This partnership has focused especially on imports of crude oil, coal, natural gas and electricity.

The turning point came in 2014, with subsequent intensification of sanctions in 2022, forcing Russia`s energy trade to undergo fundamental reconfiguration. This transformation has manifested through three key developments: (1) substantial redirection of hydrocarbon exports toward Asian markets, (2) accelerated investments in transport and logistics infrastructure, and (3) strategic adjustments in commodity mix and pricing approaches. China`s combination of massive energy demand and political willingness to maintain trade made it the natural destination for reoriented Russian exports.

The objective of this study is to conduct a comprehensive analysis of the dynamics and structure of Russia`s energy exports to China during the period from 2014 to 2023. This commodity category (HS Code 27) was selected for focused examination because it represents the largest and most strategically significant component of Russia`s energy exports to China, accounting for over 60% of total energy trade between the two countries, while also being particularly sensitive to sanctions-induced market disruptions.

Methodologically, the study combines quantitative analysis of China`s customs data (WITS, CEIC) and international energy statistics (Enerdata) with a policy-driven evaluation of sanctions` impact on trade practices. The policy dimension evaluates how sanctions have transformed contractual frameworks, payment solutions and development patterns.

The investigation addresses three critical dimensions of the evolving energy partnership:

1. Operational adaptations in export redirection mechanisms under sanctions pressure.

2. Shifting power dynamics in Russia-China energy interdependence.

3. Future viability of the trade relationship amid persistent geopolitical constraints.

The analytical framework combines comparative assessment of physical and monetary trade volume under HS Code 27 with evaluation of structural transformations in bilateral energy cooperation. Particular emphasis is placed on how sanction regimes have reconfigured trade patterns while creating new institutional arrangements between the partners.

1. Dynamics and structure of fuel and energy exports to China

China is one of Russia`s main trade partners. Since 2017, it has become the primary buyer of Russians goods, taking the top position among all other countries in terms of the value of Russians exports – surpassing the Netherlands, which had been the leading destination from 2014 to 2017 [1]. Simultaneously, Russia`s importance for China also increased: by the end of 2023, Russia ranked sixth among the largest suppliers to the Chinese market, behind only Taiwan, South Korea, the United States, Japan, and Australia. Notably, Russia`s share in China`s total imports more than doubled – from 2% in 2014 to 5% in 2023.

The majority of Russia`s exports to China during the study period (2014-2023) fell under HS Code Group 27: “Mineral fuels, oil and products of their distillation, bituminous substances.” This group represents the core of Russia`s overall export structure, although there

has been a slight downward trend in its share [2]. In contrast, China has shown an increase in the share of Group 27 in its total imports – from 16% in 2014 to 20% in 2023 [3]. A significant surge occurred in 2022, with a 5-percentage point increase compared to the previous year [4-5].

According to data from China`s Customs Administration, the share of HS Code Group 27 in the total value of imports from Russia amounted to 73% in 2023, which is slightly higher than the 70% recorded in 2014 (see Figure 1). The highest share was observed in 2022, reaching 75%.

Figure 1. Dynamics of the share of Commodity Group 27 in Russia`s exports to China, 2014-2023 (%)

Source: Calculated and compiled by the author based on data from the Chinese Customs Service and TrendEconomy.

The value of imports of Commodity Group 27 from Russia increased by USD 66 billion over the period under review. The largest growth occurred in 2022: that year, the value of imports of Group 27 rose by USD 31 billion compared to 2021, which explains the highest share of the group “Mineral fuels, oil and products of their distillation, bituminous substances” recorded that year (Fig.2).

Figure 2. Dynamics of Russia exports to China in 2014-2023, including Group 27 products, USD billion

Source: compiled by the author based on data from the General Administration of Customs of the People`s Republic of China and TrendEconomy.

The increase in export volumes of Group 27 products has affected Russia`s position among energy resource suppliers to China. Russia`s share in China`s imports of Group 27 goods doubled, rising from 9% in 2014 to 18% by the end of 2023 (Fig.3). as a result, since 2016, Russia has taken the leading position among suppliers of Group 27 energy resources to China, surpassing Saudi Arabia and Angola [6-8].

Figure 3. Dynamics of Russia`s share in China`s imports of Group 27 products, %

Source: Calculated and compiled by the author based on data from the General Administration of Customs of the people`s Republic of China and TrendEconomy.

Within commodity group 27, the largest share of Russia`s exports to China are accounted for by crude oil and petroleum products (HS code 2709). By the end of 2023, these products made up 64% of the total export value. They are followed by coal and solid fuels derived from it (HS code 2701) – 15%, petroleum gases (HS code 2711) – 12%, and non0crude petroleum products (HS code 2710) – 8%. Electricity (HS code 2716) and lignite (HS code 2702) account for less than 1%. Compared to 2014 the export structure has become more balanced. In 2014 crude oil and petroleum products (2709) accounted for 84% of all exports, but by 3032 their share had decreased by 20 percentage points to 64%, while the shares of other product groups increased. For example, coal exports rose from 7% to 15%, and petroleum gases from less than 1% to 12% (Fig.4).

Figure 4. Structure of Russia`s key Commodity Group 27 exports to China in 2014 and 2023, %

Source: Calculated and compiled by the author based on data from Trend Economy.

Based on the data presented in Figure 4, it can be concluded that the structure of Russia`s energy exports to China shows a clear trend toward diversification. This reflects both changing demand on the part of China and Russia`s adjustment of its export strategy under restrictions in other directions. The composition of exports within commodity group 27 has become more differentiated. This structural shift highlights the adaptation of Russia`s energy trade to new economic and technological realities, as well as China`s growing need for a wider range of fuel types.

2. Crude Oil exports: volume growth and the impact of price trends

The category of crude oil and petroleum products plays a central role in Russia`s exports to China. Between 2014 and 2023, exports in this category showed significant growth both in value and in physical volume. The value of crude oil exports more than doubled – from USD 35,7 billion to USD 60,7 billion. In physical terms, the growth was even more pronounced: export volumes increased by 66,4 million tons, reaching 99,6 million tons – a threefold increase (Fig.5).

Figure 5. Dynamic of Crude Oil and Petroleum products from Russia to China in 2014-2023

Source: Calculated and compiled by the author based on WITS data.

As shown by the data in Figure 5, apart from certain periods influenced by external factors, the increase in export volumes was generally steady, with the only notable exception being 2021. The fluctuations in growth were largely driven by price factors rather than physical volumes. For example, in 2015-2016, oil prices declined due to an oversupply on the global market, a slowdown in China`s economic growth [9], weaker global GDP growth overall, increased production by OPEC member countries, the lifting of sanctions on Iran, and that country`s ramp-up in oil production and exports [10]. In 2019-2020, the global economy again slowed down, oil markets experienced temporary oversupply in some quarters [11], and consumption shrank due to the COVID-19 pandemic [12]. In 2023, oil production increased while demand growth among major consumers – the U.S., UE, and China [13]– weakened. Additionally, the price cap on Russian oil imposed by the G7, EU, and Australia came into effect (Fig.6) [14]. Despite these disruptions, export volumes continued to grow steadily overall.

Figure 6. Dynamics of the average price of Russian Crude Oil and Petroleum products exported to China in 2014-2023, USD/ton

Source: Calculated and compiled by the author based on wits data.

Overall, the average price of Russian oil supplied to China declined by USD 144 per ton between 2014 and 2023, according to Figure 6. In 2023 alone, the price dropped by USD 67 per ton compared to 2022. It is also worth noting that in 2021, China`s total imports of products under HS code 2709 decreased significantly – by 29 million tons, down to 513 million tons. This overall decline in demand affected imports from all suppliers, including Russia.

An additional factor supporting Russia`s oil exports was the increase in domestic oil production: in 2022, output grew by 137 thousand barrels per day compared to 2021. However, in 2023 production volumes declined by 164 thousand barrels per day. This decrease was driven by the impact of international sanctions, the OPEC+ agreement, the withdrawal of Western investors, and internal infrastructure constraints (Fig.7).

Figure 7. Dynamics of Oil production volumes in Russia, 20214-2023, barrels/day

Source: Compiled by the author based on CEIC data.

The dynamics of Russian oil exports to China are influenced not only by external restrictions and changes in price conditions but also by the internal situation in China. Between 2021 and 2023 the country experienced steady growth in oil consumption, driven by the recovery of economic activity after the pandemic and the expansion of industrial production. In 2021 China`s oil consumption increased by 484 thousand barrels per day compared to the previous year, followed by an additional increase of 82 thousand barrels per day in 2022, and a further growth of 1,607 thousand barrels per day in 2023 (Fig.8). This increase in consumption occurred alongside a rise in domestic oil production in Chins, which grew by 99 thousand barrels per day in 2021, 196 thousand barrels per day in 2022, and another 87 thousand barrels per day in 2023. However, this increase in production was insufficient to meet demand, intensifying the need for imports, including those from Russia.

Figure 8. Dynamics of Crude Oil production and consumption volumes in China, barrels/day

Source: Compiled by the author based on CEIC. China Crude Oil Production and Consumption.

3. Other key energy resources: Coal, Gas and Electricity.

In addition to oil, Russia`s exports to China include other important categories of energy resources. Although crude oil continues to. Dominate the structure of energy exports, recent years have seen a noticeable increase in the export of coal, natural gas and electricity (to a lesser extent). Analyzing the dynamics of these export segments provides a more comprehensive understanding of the scale and nature of energy cooperation between Russia and China amid a shifting geoeconomic landscape.

Between 2014 and 2023, Russia`s coal exports to China grew significantly. In value terms, exports increased more than sevenfold – from USD 2 billion to USD 14 billion. In physical terms, export volumes nearly tripled, rising from 25 million to 69 million tons (Fig.9).

Figure 9. Dynamics of exports of Coal and Solid Fuels derived from it from Russia to China, 2014-2023

Source: calculated and compiled by the author based on WITS data.

A significant portion of growth was driven by rising prices: by the end of 2023, the average price reached USD 208 per ton – doubling compared to 2014, with an increase of USD 121 per ton (Fig.10). a notable surge in coal prices in 2022 was triggered by a temporary energy shortage in the EU, resulting from its decision to stop purchasing Russian gas amid worsening relations with Russia. In 2023, however, this factor no longer influenced coal prices, as the risks associated with limited gas reserves in Europe had diminished.

Figure 10. Dynamics of average price of Russian Coal and Solid Fuels derived from it supplied to China, 2014-2023, USD/ton

Source: Calculated and compiled by the author based on WITS data.

The substantial increase in coal prices after 2020 was largely driven by the post-pandemic economic recovery China and other countries during 2021-20222. As a result, global demand for this energy resource began to rise in 2021. In China, coal consumption also grew significantly between 2021 and 2023 – by 221 million tons in 2021, 379 million tons in 2022, and 321 million tons in 2023 compared to previous year. For comparison, the increase was only 58 million tons in 2022 relative to 2019, and 50 million tons in 2019 relative to 2018 (Fig.11).

Figure 11. Dynamics of Coal and Lignite production and consumption in China, million tons

Source: Compiled by the author based on Enerdata.

Nevertheless, the gap between China`s consumption and domestic production continues to widen, creating opportunities for further growth in Russian coal exports. Russia`s production capacity is also expanding over the period under review, coal output increased by 95 million tons, while investment in the sector grew from 58 billion to over 250 billion rubles by 2022.

Russian exports of petroleum gases and other gaseous hydrocarbons to China also demonstrated rapid growth between 2014 and 2023. In value terms, exports increased 134-fold – from USD 87 million in 2014 to USD 12 billion in 2023. In physical terms, the growth was similarly dramatic: volumes rose by 18 million tons, from 131 thousand tons in 2014 – an increase of 136 times (Fig.12).

Figure 12. Dynamics of Petroleum Gas and other gaseous hydrocarbon exports from Russia to China, 2014-2023

Source: Calculated and compiled by the author based on WITS data.

The growth in shipments accelerated significantly after the start of pipeline deliveries via the Power of Siberia gas pipeline in 2019 and its full commissioning at the end of 2022 [15]. However, by 2023, the capacity of the Power of Siberia reached its limit (38 billion cubic meters per year [16]), and any further increase is only possible with the implementation of the Power of Siberia-2 project.

The average price of Russian LNG supplies to China has even decreased compared to 2014, falling from USD 666 per ton in 2014 to USD 638 per ton in 2023 (Fig.13), despite a brief spike in 2022.

Figure 13. Dynamics of the average price of Russian Natural Gas (gaseous) and LNG supplied to China, 2014-2023, USD/ ton

Source: Calculated and Compiled by the author based on WITS data.

Unlike exports of oil, gas and coal, Russia`s electricity exports to China showed a downward trend over 2014-2023. In value terms, shipments fell by USD 21 million, even though the unit price was almost unchanged – USD 0,043 per kWh in 2014 versus USD 0,048 per kWh in 2023. In physical terms, export volumes declined by 522 million kWh over the period. Notably, 2022 saw a substantial increase compared to 2021 (+892 million kWh) following the signing of an agreement between the two countries to expand electricity supplies from that year onward (Fig.14).

Figure 14. Dynamics of Russian Electricity exports to China

Source: Calculated and compiled by the author based on WITS data.

Further increases in export volumes were hindered by rising domestic consumption in the Russia Far East, as well as outages at thermal power plants and small hydropower stations [17]. Despite the overall growth in Russia`s electricity production (Fig.15), which reached 114 TWh over 2014-20233, including an 8 TWh increase from 2022 to 2023, the Far Eastern Federal District (FEFD) continues to face capacity shortages amid rising consumption – a trend characteristic of Russia as a whole.

Figure 15. Dynamics of Electricity Production and Consumption in Russia, TWh

Source: Compiled by the author based on Enerdata.

At the same time, electricity demand in China continued to grow, reaching 8,392 TWh in 2023 (Fig.16).

Figure 16. Dynamics of Electricity Production and Consumption in China, TWh

Source: Compiled by the author based on Enerdata.

Conclusion

Under the pressure of sanctions and a reorientation of its foreign economic policy, Russia has significantly transformed the structure of its energy exports, making China its main strategic partner. Between 2014 and 2023, shipments of crude oil to China nearly tripled in volume, accompanied by diversification of the commodity structure and a strengthening of Russia`s position in the Chinese energy market. The most significant changes occurred in 2022-2023, when Russia`s share in China`s oil imports reached 18%, and Russia consistently maintained its leadership among suppliers of products in commodity group 27. Coal and natural gas also made a substantial contribution, with their shipments showing steady growth in response to China`s increasing energy deficit.

At the same time, risk and limitations remain. These include price volatility in the global oil market, the exhaustion of existing pipeline capacities, internal infrastructure constraints within Russia, as well as a potential slowdown in demand in China amid the energy transition and the development of low-carbon technologies.

Building on these findings, we propose to conduct an empirical study on “The Protentional Russia-China Energy Trade Under Sanctions”, which will focus on three key areas:

1. Resilience of trade mechanisms – assessing the long-term stability of national currency settlements, adaptation to new sanctions, and changing demand patterns.

2. Infrastructure development needs – examining pipeline expansion opportunities (such as Power of Siberia 2) and new logistics corridors under sanctions pressure.

3. Energy transition impact – analyzing how China`s decarbonization strategies affect Russia export structures and prospects for renewable energy cooperation.

Looking ahead, the strengthening of the energy partnership between Russia and China will largely depend on the ability of both parties to adapt to global energy trends, expand transport infrastructure, and enhance the flexibility of trade mechanisms amid geopolitical instability.

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