1. Oil prices are affected by many factors, but whatever the price is at any given time, discounts and lower market share still mean lower revenues and profit than otherwise.I'm kind of an amateur when it comes to international commodity trade, so correct me if I'm wrong.
The thing is, the way I see it, the sanction increase the price of energy to an extent that the Russian could still make considerable profit selling their product at below market price. I don't know to what extend though (perhaps someone more knowledgeable could clarify), it could be that these profits are less than what they could be getting had they are not sanctioned by the west, perhaps not, or perhaps their profit actually increase. From what I've read, OPEC are willing to increase production to drive down the price of oil, but to what extend? With the risk of recession thanks to the recent interest rate hike by the fed, would that not drive demand for oil down? Based on my own limited knowledge and logic, The only way for Saudi to displace Russian oil in Chinese market, is if the market price for it becomes competitive with respect to Russian oil, because I doubt the Saudi wants to sell them at anything other than the market price. So they have to increase production, but they don't want to tank the price of oil too much, which is likely with risk of global recession in the horizon. So even with increased production, I doubt the price of oil will be competitive with what Russian is offering, and as long as the situation remains the same, there will always countries, especially poorer ones, that will look to Russian source to meet their domestic needs.
2. With Russia forced out of some markets, Saudi Arabia gains more market power and can more easily influence the price in these markets (their demand curve gets steeper). In theory, it might be possible for them to increase supply and make greater profit by selling more, though at a lower price.
3. This is exactly why Russia will continue selling oil at a discount to China because otherwise Saudi Arabia and other players could increase their production and sell there as well, while Russia's options are more limited.