How India Is Fueling The West With Cheap Russian Oil

India’s importance is expected to grow after new European Union sanctions (File)

New Delhi:

India is playing an increasingly important role in the global oil market, buying more and more cheap Russian oil and refining it into fuel for Europe and the US.

However, New Delhi has faced little public backlash as it is meeting two Western goals of cutting Moscow’s energy revenue while averting an oil supply shock. And as Europe ramps up sanctions, India will only become more central to the global oil map that has been redrawn by Vladimir Putin’s year-long war in Ukraine.

Ben Cahill, a senior fellow with the Center for Strategic and International Studies, a Washington think-tank, said: “U.S. Treasury officials have two primary goals: to keep the markets going. fully supplied and depriving Russia of its oil revenues. “They know that Indian and Chinese refiners can earn higher profits by buying discounted Russian crude and exporting the product at market prices. They’re happy with that.”

According to data intelligence firm Kpler, India shipped about 89,000 barrels of petrol and diesel per day to New York last month, the highest level in nearly four years. Daily low-sulfur diesel flows to Europe stood at 172,000 barrels in January, the most since October 2021.

India’s importance is expected to grow after new European Union sanctions on Russia’s petroleum exports take effect on Sunday. The ban would remove a large chunk of diesel from the market and see more consumers, especially in Europe, tap into Asia to fill the supply gap.

That would make cheap Russian oil more attractive to India, which depends on imports for about 85 percent of its crude oil needs. Its refineries, including state-run processors responsible for meeting domestic demand, boosted exports last year to profit from higher international prices.

Promoting the West

“India is a net exporter of refined products, and much of this will be shipped to the West to help reduce it,” said Warren Patterson, head of commodity strategy at Singapore-based ING Groep NV. ease the current tightening situation”. “It is clear that an increasing part of the materials used for this product is of Russian origin.”

Under EU guidelines, India is likely to operate under the rules. When Russian crude is processed into fuel in a country outside the bloc like India, the refined products can be shipped to the EU as they are not considered to have originated in Russia.

Serena Huang, lead Asia analyst at Vortexa Ltd, said the Group of Seven wanted to cut Moscow’s revenue as much as possible, but it was also interested in ensuring that oil and refined products of Russia continues to be circulated to avoid a global supply crisis. .

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An important aspect of the mechanism to limit revenue for the Kremlin and keep some oil on the market is the price ceiling on Russian crude, a measure led by the US. India has not publicly said whether it is complying or not complying with the limit, but sanctions have brought oil from the OPEC+ producer below a ceiling of $60 per barrel.

A spokesman for the US National Security Council said a price cap has been put in place that countries including India can take advantage of to keep the energy market stable, while limiting the revenue of the energy sector. Kremlin.

“India’s willingness to buy more Russian crude oil at a higher discount is a feature, not a fault, of the Western nations’ scheme to inflict economic damage on Putin without causing harm to Russia. harm themselves,” said Jason Bordoff, founding director of the Global Center. Energy Policy at Columbia University and a former adviser in the Obama administration.

Executives and officials from countries and companies including Saudi Arabia, United Arab Emirates, United States and Abu Dhabi National Oil Company will gather in Bangalore on Monday to participated in a three-day energy forum organized with India’s Ministry of Oil and Natural Gas.