Russia may be reeling in billions in oil revenue, thanks to sky-high crude prices that are the direct result of Western sanctions, but its list of potential customers is shrinking and it is having to pin more and more of its hopes on top commodity importer China.
The US placed a full embargo on Russian energy imports, while the UK will phase out its purchases of Russian fuel. The EU has banned imports of Russian coal, but is still trying to get all member countries to agree to a ban on the country's crude and refined products.
Russia has 7 million barrels a day of exports and 3 million barrels a day of imports from the EU. Before there was any talk of import bans, traders were already shunning Russian oil.
India and China have stepped in to buy oil from Russia at bargain prices. India has purchased at least 40 million barrels of Russian crude since it invaded Ukraine. This is still less than half a million barrels per day.
China has been a big customer. The country's independent oil refiners have been buying cheap crude. China is taking a lot of Russian oil, but its appetite is not crazy. Its traders have imported 1 million barrels of Russian crude. The country is still subject to a series of tough coronaviruses that have weighed on energy demand.
Even if demand from China fully recovers, the two countries that would take in Russia's oil - India and China - would not make up for the loss of EU demand, according to an analyst.
He said that China and India alone are not going to come to the rescue.
Russia will try to find new markets.
He said that several Middle East exporters produce similar grades of crude to Russia's flagship Urals grade.
India has long-term trade agreements with Gulf countries that they would want to keep.
He said that tighter restrictions from the EU would affect Russia's ability to move more oil to Asia.
Russia could cut production or build more storage facilities.
Russia started cutting crude production last month.
According to the Kremlin, output will fall as much as 17% this year from around 11 million barrels per day.
Some of the demand may recover this month. In the long-term, there is not a lot of sustainable solutions other than finding new buyers and they will struggle with that.
The best-case scenario is that India and China absorb all of the disrupted Russian barrels, he said.
He said that it would be more of a disruption.
The worst-case scenario, I think, would be something along the lines of, Chinese demand will recover and at the same time, you're going to see growing pressure on imports from Russia.
The Russian government in April said it was considering building storage facilities for 700 million barrels of oil, equivalent to 70 days of global consumption.
He said that oil prices may be close to the peak already, but there is still a possibility of a shortfall if Russia can't find new customers.
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