NEW DELHI — India, and other Asian countries are increasingly a vital source of oil revenue to Moscow despite the strong pressure from Washington. The European Union and other allies have cut off Russian energy imports in response to sanctions imposed by the United States over its war against Ukraine.
These sales increase Russian export revenue, even though Washington and its allies are trying limit financial flows to support Moscow’s war effort.
According to Kpler, India is an oil-hungry nation of 1.4 billion people and has consumed nearly 60 million barrels so far in 2022. This compares with 12 million barrels in 2021. However, the volume of oil shipped to Asian countries like China has increased in recent months, but to a lesser degree.
Interview with The Associated Press: Sri Lanka’s prime Minister said that he might be forced to buy more oil from Russia because he is desperate for fuel to keep the country going during a severe economic crisis.
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Ranil Wickremesinghe, Prime Minister, said Saturday that he would first seek out other sources but would still be open to purchasing more crude oil from Moscow. To restart its sole refinery, Sri Lanka purchased a 99,000-ton shipment from Russia in May.
Russia’s invasion of late February has seen oil prices rise dramatically. This gives refiners in India, and other countries, an incentive to tap oil Moscow offers at steep discounts of $30- $35. These are in comparison to Brent crude oil and other international oil currently trading at around $120 per barrel.
After the European Union (27-nation bloc), the main market for fossil fuels, which supplies most of Moscow’s income abroad, agreed to stop oil purchases at the end of the year, their importance increased to Russia.
Matt Smith, Kpler’s lead analyst for tracking Russian oil flows, said that “it seems like a distinct trend has become ingrained now.” As the shipments of Urals oil to Europe are reduced, crude oil is flowing to Asia where India has been the largest buyer. China was second. According to ship tracking reports, Turkey is another important destination.
Smith stated that India is a great refining hub. “People are realizing India is such an affordable place to buy crude oil, refine it, and send it out as clean products, because they can make such strong margins,” Smith said.
About 430,000 barrels of crude oil were unloaded by 30 Russian tankers that arrived in India in May. According to the Centre for Research on Energy and Clean Air (an independent think tank located in Helsinki), an average of 60,000 barrels were delivered each day between January and March.
China’s state-owned and independent oil refiners have increased their purchases. According to the International Energy Agency, China was the biggest single buyer of Russian oil in 2021. It bought an average of 1.6 million barrels per hour.
Although India’s imports still make up only a quarter, the rapid increase in imports since the war began could cause friction between Washington DC and New Delhi.
After a meeting between U.S. foreign and defense ministers, Antony Blinken stated that the U.S. recognized India’s need to have affordable energy. However, he said that “we’re looking at allies and partners to not increase their purchases Russian energy.”
According to Treasury Secretary Janet Yellen, both the U.S. as well as its European allies are currently engaged in “extremely active discussions” on coordinating measures to attempt to limit the price of Russian oil.
She stated that the goal would be to keep Russian oil flowing to the global market in order to stop crude oil prices, which are already at 60 percent, rising further.
