Introduction
Since 2022, sanctions targeting Russia have triggered one of the most significant reconfigurations of global trade flows in recent history. Measures designed to limit Russia’s access to finance, technology and export markets have not only reduced trade with sanctioning states but also pushed Moscow and its trading partners to find alternative routes, currencies, and logistics chains. The result is a fast-evolving landscape of trade diversion, de-dollarization, and regional re-alignment that affects commodity markets, supply-chain design, and the risk calculus of banks and corporates around the world.
This article explains how trade flows are shifting, quantifies key patterns where evidence is available, examines the mechanisms (payment system changes, rerouting, barter and commodity swaps), and draws practical implications for companies, banks, and policy makers.
1. Big-picture shifts: diversion, substitution and regional rebalancing
Sanctions have produced three observable, related outcomes:
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Trade diversion — sanctioned-bound commerce moves from Western markets and routes to alternative buyers and transit points (notably in Asia, the Middle East, and parts of Africa).
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Instrument substitution — a move away from dollar/Euro-cleared flows toward local currencies, barter, commodity-for-service deals, or alternative messaging and payment rails.
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Geoeconomic rebalancing — long-term deepening of trade ties between Russia and specific partners (China, India, Turkey, some Middle Eastern and African states), with new contracts, pipelines and bilateral agreements emerging.
These patterns are visible across hydrocarbons, coal, metals and some agricultural commodities: volumes that once flowed primarily to Europe have been redirected; payment currencies and counterparties have changed; and new routing patterns (northern Arctic routes, southern corridors via Turkey and the Middle East) have appeared.
Evidence: analyses and monthly trade monitoring show that Asia — primarily China and India — now account for a much larger share of Russia’s seaborne oil and coal exports than before the 2022 measures. (See citations below for recent data.) CREA
2. Energy: the fastest, most visible reconfiguration
Energy markets offer the clearest illustration of sanction-driven trade diversion.
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After 2022, European importers sharply cut purchases of sanctioned Russian crude and refined products; Asian buyers — notably India and China — increased volumes, often at discounted prices. By mid-2025, data series show China and India purchasing a substantial share of Russia’s seaborne crude and coal shipments, with China frequently the largest single destination for crude. The pattern is not simply “replacement” of volumes but also involves pricing concessions, alternative insurance arrangements, and different logistics (longer sea legs, different port calls). CREA
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These flows have helped Russia maintain export levels and revenues in some months, but often at a cost: discounts, higher shipping & insurance complexity, and greater reliance on payment workarounds. Independent trackers and policy briefs underline that while volumes can be rerouted, revenue per barrel and net foreign exchange benefits are affected by lower prices and additional transaction friction. cepii.fr
Practical implication: commodity traders and refiners must factor in new routing times, quality differentials, and the legal/compliance costs of dealing with secondary markets for sanctioned-origin cargoes. Insurers and banks should price the additional logistics and sanction-compliance risk into financing and coverage.
3. Payments & de-dollarization: how money follows trade (but not in the same currency)
One of the clearest structural changes is the shift in payment currencies and messaging systems:
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Russia has accelerated use of local currencies and alternative settlement methods. Bilateral settlements in rubles, yuan (CNY), Indian rupees (INR) and other national currencies increased markedly since 2022. Multiple reports and central-bank data indicate a clear rise in non-dollar trade settlement between Russia and key partners — part choice, part necessity following restricted dollar/euro access. bloomberg.com
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Payment rails have multiplied. Russia’s domestic SPFS messaging system and China’s CIPS have become more prominent for Russia-related transactions. While these alternatives do not (yet) match SWIFT’s global reach, they reduce reliance on Western-cleared corridors and facilitate trade with partners willing to accept non-dollar settlement. OilPrice.com
The net effect is partial de-dollarization in the corridors most affected by sanctions. For global firms, this means revisiting treasury operations: multi-currency liquidity management, counterparty FX risk, and the need for local-currency collections and payouts in new markets.
4. Logistics and routing: new chokepoints, longer legs
Trade diversion produces new chokepoints and longer supply chains:
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As traditional northern European ports and Baltic routes became less accessible or more legally risky for some cargoes, shipments have re-routed via Turkish, Middle Eastern, Black Sea (non-EU ports), Far East and Arctic routes. These diverted flows increase voyage time, bunker costs and exposure to maritime operational risks. Recent monthly export analyses confirm shifting port share and changing regional patterns. Reuters
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The rerouting also concentrates traffic on certain hubs (e.g., ports in Turkey, southern Europe, or the Arabian Peninsula), creating new congestion and customs/clearance pressure points that were not previously designed to handle such volume.
For logistics managers and insurers, the lesson is to map these alternate corridors, stress-test delivery windows, and renegotiate terms with carriers and insurers to reflect new routing and risk profiles.
5. Trade-based workarounds: barter, commodity swaps, and informal channels
Sanctions encourage creative—but legally risky—workarounds:
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Barter and commodity swaps have been used where sanctioned banking channels are constrained. These mechanisms reduce direct currency flows but complicate valuation, tax treatment, and compliance checks. They can also be fertile ground for trade-based money-laundering if not properly recorded and audited. Policy reviews and audits have flagged third-country diversion and complex procurement networks as growing enforcement challenges. files.gao.gov
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Informal networks and private arrangements, sometimes with correspondent banks in tolerant jurisdictions, also proliferate. These increase opacity and the possibility of secondary sanctions exposure for intermediaries.
Firms should avoid ad hoc barter unless underpinned by clear legal advice, meticulous documentation and pre-approved compliance structures.
6. Secondary effects: costs, supply shocks, and inflationary pressure
Even where trade can be diverted, the economic cost is real:
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Higher transaction costs (complex payments, longer shipping, alternative insurance) and discounts on commodity prices compress margins for exporters and importers. Several analysts and policy briefs estimate meaningful increases in import prices for certain goods after the sanctions, particularly when supply was rerouted through longer, less efficient corridors. cepii.fr
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For sanctioning countries, reduced access to Russian inputs (fertilizers, certain metals, energy) has raised procurement costs, disrupted manufacturing inputs in the short term, and contributed to inflationary pressure in some sectors.
Businesses must model the elasticity of supply and demand for affected inputs and consider strategic hedging, stockpiling or finding alternative suppliers.
7. Compliance, banks and correspondent risk: a tougher landscape
Banks face acute legal and reputational risk when their clients trade with sanctioned entities or engage in diverted supply chains:
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The risk of secondary sanctions and being cut off from major clearing systems prompted extensive de-risking, which left some legitimate firms with reduced access to trade finance. This in turn tightened liquidity for SMEs and traders who historically relied on predictable correspondent relationships. (See earlier sections on de-risking and payment fragmentation.) cepr.org
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Banks and insurers now apply deeper KYT (Know Your Transaction) procedures, vessel tracking checks, and document authentication across trades suspected of involving diverted cargoes. RegTech and AI tools are increasingly mandatory to handle the volume and complexity of exception alerts.
Trade finance teams should be prepared for longer approval cycles, stricter collateral checks, and potentially higher costs for confirmatory insurance.
8. Policy responses and multilateral coordination
Policy makers in sanctioning states and international bodies are trying to limit third-country circumvention while minimizing humanitarian disruption:
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Improved customs data sharing and export controls are being pursued, but reports show enforcement is challenging given elaborate third-party procurement networks. Multilateral coordination (sharing of vessel movement data, suspicious trade patterns, and beneficial-ownership registries) is being strengthened, but gaps remain. files.gao.gov
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At the same time, some non-Western states are hedging by deepening bilateral trade ties with Russia—shaping a world where trade governance becomes more fragmented and regionalized.
Policymakers must balance targeted sanctions enforcement with mechanisms that avoid broad humanitarian and trade collateral damage.
9. Strategic steps for business leaders and trade teams
If your company is exposed to traded goods or markets affected by Russia-related sanctions, adopt a four-point action plan:
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Map exposure end-to-end — identify suppliers, ports, shipping routes, and payment flows that could involve sanctioned counterparties.
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Strengthen compliance & documentation — upgrade KYT/KYC, add vessel and cargo verification, and ensure contracts require full transparency on origin and ownership.
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Diversify procurement & hedging — secure alternative suppliers and build contingent logistics plans to reduce dependency on any single corridor.
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Engage banks early — get pre-approval on financing structures and work with banks that have robust sanctions-screening capacity and a clear policy on secondary-sanctions risk.
These measures help preserve market access and manage operational continuity while avoiding legal pitfalls.
Conclusion
Sanctions on Russia have catalyzed a durable shift in global trade flows: energy and commodity routes have re-aligned toward Asia and other non-Western partners, payment systems are diversifying away from the dollar in specific corridors, and logistics networks are adapting to new chokepoints and risks. Trade diversion solves immediate liquidity and supply questions, but it also imposes real economic and compliance costs.
For businesses, banks, and policymakers the imperative is clear: adapt fast, invest in compliance intelligence, and restructure supply-chain resilience so that trade can continue in a way that is both lawful and economically sustainable. The new trade topology is more regional, more complex — and more strategic in how companies must navigate payments, contracts and routes.
FAQ
Q1 — How much of Russia’s exports shifted to China and India?
Data trackers and monthly analyses show China and India now account for a much larger share of Russian crude and coal seaborne exports than pre-2022, with some months seeing China absorb close to half of Russia’s seaborne crude flows. CREA
Q2 — Is global de-dollarization real or overstated?
Partial de-dollarization is real in Russia’s bilateral corridors: ruble, yuan and rupee settlements have increased materially for trade between Russia and key partners, though the dollar remains dominant in many other corridors. bloomberg.com
Q3 — Can sanctions fully stop Russia’s exports?
Not completely. Trade diversion and alternative mechanisms (discounted sales, different insurers, barter) allow many flows to continue — but often at a cost (lower price, higher logistics and compliance friction). cepii.fr
Q4 — What are the biggest compliance risks for banks?
Secondary sanctions exposure, opaque beneficial ownership, and participation in diverted or barter transactions lacking clear documentation are the primary risks. Banks must deploy stronger KYT and tech-enabled monitoring. cepr.org
Q5 — What should purchasers do to avoid legal risk?
Obtain full provenance documentation, conduct enhanced due diligence, seek legal opinions on payment structures, and prefer routes and logistics partners with transparent compliance controls.
