China and Russia have moved forward on a deal that could lead to a massive natural gas pipeline being built, strengthening energy ties between the two countries. This is as India continues to buy cheap Russian crude oil – standing up to President Trump’s tariffs on that country.

These are two chess moves in a much larger geopolitical battle over resource dominance, in reaction to the new U.S. approach to global trade.

The Russian invasion of Ukraine started an important global divide in oil and gas markets, said Eurasia Group senior analyst Gregory Brew.

“Due to sanctions and the G7 price cap,” he said, “Russian crude has been moved into a number of markets, the largest, of course, being India, China.” 

President Trump’s tariffs on India were meant to cut them off from Russian crude. 

“That hasn't really happened yet,” Brew said.

Consider the recent meeting of leaders of India, Russia and China. Brew said India and China’s relationship with Russia is, “if anything, getting warmer.”

And the possibility of a new China-Russia natural gas pipeline shows China is prioritizing energy security, given tensions with the U.S., said Tatiana Mitrova, a professor and research fellow at Columbia University’s Center on Global Energy Policy.

“It actually makes China the key player on the global gas market,” she said.

China is a top importer of liquefied natural gas that comes in on ships. A pipeline from Russia would give China flexibility. 

“It allows China to buy cheap Russian gas when the prices on LNG are higher, and and to reduce supplies from Russia, switching to the other suppliers in the periods of low prices,” she said. “It has this leverage on pricing and volumes in the gas markets.”

“It's a great card for for Xi Jinping to play,” said Jim Krane, an energy studies fellow at Rice University  “These souring U.S.-China trade relations could actually blow back onto the U.S. and onto some of President Trump's buddies in the U.S. shale patch, right? It raises questions about the Chinese market for U.S. LNG.” 

It all feels a little Cold War-ish said Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics.

“The ultimate effect that this is having on kind of global oil and gas markets is it's creating this kind of interesting, bifurcated market,” he said.

There’s a Western market supplied by the U.S. and other producers, Hendrix said, and a Eurasian bloc supplied by Russia.