As the August 8 deadline set by US President Donald Trump for the Kremlin to halt fighting in Ukraine approaches, Washington is ramping up economic pressure on Moscow — and has found a new target: Russian oil sales to China.

Curbing the volume of Russian oil purchased by China has become an unexpected point of contention in the ongoing trade talks between the US and China in Stockholm, where both sides are trying to resolve multiple disputes to avoid steep tariffs and reach a broader trade agreement.

Frustrated with Russian President Vladimir Putin’s rejection of past mediation attempts to end the war in Ukraine, Washington hopes to gain additional leverage by cutting off billions of dollars in revenue from Moscow.

“The US administration has come to understand just how crucial Russian oil sales to China are,” said Dennis Wilder, former senior White House advisor on China under President George W. Bush, in an interview with Radio Free Europe/Radio Liberty. “Without those sales, it’s fair to say the Russian economy might have already collapsed.”

But persuading Beijing to comply with the US request has proven difficult. Chinese officials have refused to reduce the country’s oil purchases during ongoing talks. In response, US Treasury Secretary Scott Bessent floated the possibility of 100% tariffs.

In a statement published last week on the platform X, China’s Ministry of Foreign Affairs responded to the threat of additional tariffs: “China will always ensure the security of its energy supply in ways that serve its national interests. Coercion and pressure will achieve nothing. China will firmly defend its sovereignty, security, and development interests.”

Former officials and energy analysts who spoke to RFE/RL said that while China is unlikely to stop buying Russian oil altogether, it may be willing to scale back purchases temporarily as a goodwill gesture — particularly as Beijing and Washington try to finalize a trade deal that could pave the way for a potential summit between Trump and Chinese President Xi Jinping, likely in October.

“Beijing might decide to quietly trim its monthly imports of Russian oil,” said Wilder, “but I don’t expect a full cut or any official announcement if it does.”

Will China Stop Buying Russian Oil?

Washington’s success in convincing Beijing to scale back its Russian oil purchases depends on the outcome of complex trade negotiations underway in Sweden, which face a deadline of August 12 for reaching an agreement.

In addition to pressure on Russian oil, Washington has also asked China to halt its imports of Iranian oil, which remains under US sanctions. Iran currently ships more than 90% of its oil exports to China.

Analysts estimate that Russia supplies roughly one-fifth of China’s total oil imports.

Trump has also intensified pressure on India, which has alternated with China as the top buyer of Russian oil since the full-scale invasion of Ukraine in February 2022.

In an August 4 post on Truth Social, Trump said he would "significantly" raise tariffs on India over its purchases of Russian oil, after previously threatening a 25% tariff on Indian goods.

Curbing Chinese and Indian imports of Russian oil would have real financial consequences for Moscow, but analysts note that Beijing also holds leverage over Washington.

The US administration is currently urging China to buy more American goods — including advanced US technology. Trump and Bessent have also called on China to ease conditions for American companies operating in the country and to increase purchases of US energy.

However, China has also leveraged its control over the supply of rare earth minerals — a group of elements essential for everything from EV batteries to advanced military technologies — to extract concessions from Washington.

This was evident in July, when the US eased restrictions on exports of aircraft engines and Nvidia’s H20 AI chips in exchange for Beijing lifting its export curbs on rare earths.

Applying excessive pressure on the oil issue could undermine progress made in US-China trade negotiations.

“Beijing has shown that its rare earth export restrictions are a powerful weapon,” said Maria Shagina, senior fellow at the International Institute for Strategic Studies in London, in an interview with RFE/RL. “The US administration won’t want to jeopardize this fragile détente.”

What Leverage Does Washington Have Against China?

Beijing may also be reluctant to take any steps that could harm Russia’s war effort in Ukraine.

China is one of Moscow’s closest allies. Putin and Xi declared a “no limits partnership” just before the full-scale invasion in February 2022. While Beijing has refrained from providing lethal military aid, Chinese firms have supplied most of the dual-use goods that have enabled Moscow to replenish missiles, drones, and other munitions throughout the war.

In July, Chinese Foreign Minister Wang Yi told EU foreign policy chief Kaja Kallas that China could not accept a Russian defeat in the war, as it would allow Washington to shift focus entirely to China. The statement was first reported by the South China Morning Post and later confirmed by RFE/RL.

Analysts say a bipartisan Senate bill could also become a pressure tool in US negotiations with China.

The proposed legislation would impose tariffs of up to 500% on countries that support Russia’s war machine by purchasing its oil and gas — with China and India as primary targets. However, enforcing such measures — if passed — would mark a sharp escalation in tensions.

In the meantime, Beijing is weighing its options. While it considers trimming Russian oil imports, it is also trying to entice the US administration with promises to boost investments in the US and increase imports of American energy and agricultural products.

Joe Webster, an expert on China-Russia energy relations at the Atlantic Council, said it is more likely that China will raise its purchases of US energy rather than cut back on Russian oil.

“Increasing US energy imports is a straightforward step that China can take easily,” he said. “Reducing Russian imports is a far greater challenge — one that would do real damage to Russia, and Beijing clearly doesn’t want to see Moscow lose the war.”

Still, even that move might be off the table.

Chinese officials have long feared that the US and its allies could choke off the country’s economy by cutting access to foreign oil. This has driven China to invest hundreds of billions of dollars to boost domestic production and build the world’s largest electric vehicle industry.

“Beijing doesn’t want to depend on anyone — not Russia, and certainly not the United States,” Webster said. “So this request will be met with hesitation.”

Bitcoin slipped slightly on Wednesday and remained under pressure as ongoing uncertainty surrounding US tariffs and slowing economic growth kept traders cautious toward risk-linked assets.

The world’s largest cryptocurrency fell by 0.8% to $113,467.7 as of 12:54 a.m. Eastern Time (04:54 GMT), staying near its lowest level in about a month, which it had hit earlier this week.

Cryptocurrency prices broadly declined, as the brief rebound in altcoins lost momentum amid weak risk appetite.

Bitcoin and other cryptocurrencies also remained vulnerable to extended profit-taking after strong gains posted during July.

Novogratz: Bitcoin Treasury-Focused Firms May Have Peaked

Michael Novogratz, founder of Galaxy Digital (TSX: GLXY) and a prominent advocate for cryptocurrencies, warned on Tuesday that the trend of forming companies focused on holding bitcoin and improving their balance sheets may have reached its peak.

“The question now is: Which of the existing companies will become giants?” Novogratz said during the firm’s second-quarter earnings call.

He cautioned that the large number of companies holding bitcoin and ether treasuries could deter new entrants from joining the sector due to “a lack of oxygen,” likely referring to liquidity constraints and limited funding opportunities in the current market.

His comments come at a time when several companies are raising capital through equity offerings to invest in bitcoin — aiming to emulate the success of Strategy (NASDAQ: MSTR).

Michael Saylor’s company remains the largest institutional holder of bitcoin and has seen a massive surge in market valuation as investors seek bitcoin exposure via its stock. Strategy has raised tens of billions of dollars across multiple equity offerings, all intended for bitcoin purchases.

Still, Strategy’s recent purchases — along with new entrants like Japan’s Metaplanet Inc. (TYO: 3350) — have not been enough to halt bitcoin’s price decline.

Bitcoin Faces Resistance at $116,000 as Technical Signals Turn Bearish

Bitcoin found support on Sunday near its 50-day exponential moving average (EMA) at $113,058, managing a slight recovery into the following day and approaching the lower consolidation band at $116,000. However, the cryptocurrency faced a minor pullback near that resistance level on Tuesday, and as of Wednesday remained below $114,000.

If the 50-day EMA at $113,058 fails to hold as support and bitcoin closes below its prior record high of $111,980 on a daily basis, the decline could extend toward a retest of the key psychological support at $110,000.

On the daily chart, the Relative Strength Index (RSI) is reading 44 after failing to break above the neutral 50 level, indicating that bearish momentum is strengthening. Meanwhile, the Moving Average Convergence Divergence (MACD) has shown a bearish crossover since July 23, a signal that remains in place and supports the downward trend.

However, if bitcoin manages to hold above its 50-day EMA at $113,058, a recovery toward the key resistance level at $116,000 remains possible.

Oil prices rose on Wednesday, rebounding from a five-week low recorded the previous day, as traders focused on US President Donald Trump’s threat to impose higher tariffs on India over its purchases of Russian crude, along with a larger-than-expected drop in US crude inventories.

Brent crude futures rose by 90 cents, or 1.3%, to $68.54 a barrel by 09:36 GMT, while US West Texas Intermediate (WTI) gained 92 cents, or 1.4%, to reach $66.08.

Both benchmarks had dropped by more than $1 on Tuesday, closing at their lowest levels in five weeks and marking a fourth consecutive session of losses.

Ashley Kelty, analyst at Panmure Liberum, said: “Oil prices are rising today as markets await reactions from India and China to the threat of secondary sanctions.”

She added: “There are expectations that India might reduce its purchases of Russian crude, though I don’t believe it will stop entirely — the country is making extraordinary profits from cheap Russian oil.”

The market was supported by Trump’s renewed threat on Tuesday to impose higher tariffs on India due to its energy dealings with Russia. India, along with China, is among the largest buyers of Russian oil.

In a related development, US envoy Steve Witkoff arrived in Moscow on Wednesday on an emergency mission aimed at achieving a breakthrough in the Ukraine war — just two days before Trump’s deadline for Russia to agree to a peace deal or face new sanctions.

Analysts at Roth Capital Markets wrote in a Tuesday evening note: “Overall, the outlook for the Russia-Ukraine conflict remains uncertain, but the ongoing war and threats of escalating tariffs are likely to keep oil prices supported in the near term until the potential impact of those tariffs on oil exports becomes clearer.”

They added: “We expect limited impact on Russian oil exports, as we believe China can absorb the vast majority of the country’s crude.”

The market also found support from a decline in US crude inventories last week. According to two sources citing data from the American Petroleum Institute on Tuesday, inventories fell by 4.2 million barrels.

That figure far exceeds the 600,000-barrel draw forecasted in a Reuters poll for the week ending August 1.

Giovanni Staunovo, analyst at UBS, commented: “Yesterday’s API data showing a draw in US crude stocks was supportive for prices,” adding that “supply disruption fears from US-India tensions are already priced into the market.”

The US dollar remained confined within its recent trading range on Wednesday, as investors chose to stay neutral following another round of weak US economic data and ahead of President Donald Trump’s upcoming appointment to the Federal Reserve Board.

Trump said on Tuesday that he would decide on a nominee to replace outgoing board member Adriana Kugler by the end of the week, and has narrowed the shortlist for the next Fed Chair — to succeed Jerome Powell — to four candidates.

That same day, data showed that US services sector activity remained unexpectedly flat in July, while input costs surged at their fastest pace in nearly three years, highlighting the economic impact of Trump’s tariffs, which are also starting to weigh on corporate profits.

Still, traders were cautious about entering new positions until the Federal Reserve’s direction becomes clearer, amid growing concerns that partisan loyalty could creep into the traditionally reserved and independent world of monetary policy.

The dollar last rose by 0.1% against the Japanese yen to 147.78, while the euro held steady at $1.1577. The British pound slipped 0.1% to $1.329.

Francesco Pesole, strategist at ING Bank, wrote in a research note: “Trump’s public attacks on the Bureau of Labor Statistics over job data revisions haven’t had a major market impact so far, but it’ll be telling if the new Fed Chair nominee echoes that narrative. If that happens, it could fuel fears of the Fed disconnecting from official data — a scenario we view as clearly negative for the dollar.”

Although the dollar’s moves have been quiet this week, the currency has yet to recover from Friday’s sharp losses — its biggest single-day drop in nearly four months — after a troubling jobs report.

Trump had fired BLS Commissioner Erica McEnturfer last week following the release of July’s jobs report.

The dollar rose by 0.1% against a basket of currencies to 98.785, still well below Friday’s high of 100.25, reached just before the nonfarm payrolls data was released.

Markets are still pricing in an 86.5% chance of a Fed rate cut in September, with roughly 56 basis points of easing priced in by year-end.

However, data such as Tuesday’s ISM services PMI highlights the complexity of the Fed’s challenge — balancing price pressures from Trump’s tariffs with signs of a weakening US economy.

Ray Attrill, head of FX strategy at National Australia Bank (NAB), said: “The ISM services index clearly smells of stagflation… and that’s a double-edged sword in terms of monetary policy implications.”

He added: “For now, we think the market may be showing too much confidence in a September move being a done deal.”

US Treasury yields rose, with the 10-year yield climbing 4.2 basis points to 4.238%, and the 2-year yield rising 2.9 basis points to 3.774%, after a $58 billion auction of three-year notes that analysts viewed as relatively weak, with a bid-to-cover ratio of 2.53.

More auctions are scheduled this week, including $42 billion in 10-year notes on Wednesday and $25 billion in 30-year bonds on Thursday.

Among other currencies, the Australian and New Zealand dollars both rose 0.3%, with the Aussie reaching $0.64895 and the Kiwi at $0.59181.