India and China grow markets for rejected Russian oil

NEW DELHI — India and other Asian nations are becoming an increasingly vital source of oil revenue for Moscow despite heavy pressure from the US war in Ukraine.

Such sales are boosting Russia’s export earnings at a time when Washington and its allies are trying to limit financial flows that support Moscow’s war effort.

India, an oil-hungry country of 1.4 billion people, has consumed nearly 60 million barrels of Russian oil in 2022 so far, compared with 12 million barrels in all of 2021, according to commodity data firm Kpler. Shipments to other Asian countries, such as China, have also increased in recent months but to a lesser extent.

In an interview with The Associated Press, Sri Lanka’s prime minister said he may be forced to buy more oil from Russia as he desperately searches for fuel to keep the country running amid a severe economic crisis.

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Prime Minister Ranil Wickremesinghe said on Saturday he would seek other sources first but would be open to buying more crude from Moscow. In late May, Sri Lanka bought a 99,000-ton shipment of Russian crude to restart its only refinery.

Since Russia’s invasion in late February, world oil prices have skyrocketed, giving refiners in India and other countries an added incentive to take advantage of the oil Moscow offers them at deep discounts of $30 to $35, compared to Brent crude and other international oils now trading at around $120 a barrel.

Queuing at a gas station in Colombo, Sri Lanka, on Saturday.  The prime minister said he may be forced to buy more oil from Russia as he desperately searches for fuel to keep the country running amid a severe economic crisis.
Queuing at a gas station in Colombo, Sri Lanka, on Saturday. The prime minister said he may be forced to buy more oil from Russia as he desperately searches for fuel to keep the country running amid a severe economic crisis. Eranga Jayawardena/AP

Its importance to Russia increased after the 27-nation European Union, the main market for fossil fuels that supplies most of Moscow’s foreign income, agreed to stop most oil purchases by the end of this year.

“It looks like a different trend is taking hold now,” said Matt Smith, a principal analyst at Kpler who tracks Russian oil flows. As oil shipments from the Urals to much of Europe are cut, crude is flowing into Asia, where India has become the biggest buyer, followed by China. Ship tracking reports show that Turkey is another key destination.

“People are realizing that India is a refining hub, they take it at such a low price, refine it and ship it as clean because they can make very strong margins on that,” Smith said.

In May, some 30 Russian tankers loaded with crude oil reached Indian shores, unloading some 430,000 barrels a day. An average of just 60,000 barrels a day arrived between January and March, according to the Center for Research on Energy and Clean Air, an independent think tank based in Helsinki.

Chinese state-owned and independent refiners have also increased purchases. In 2021, China was the single largest buyer of Russian oil, averaging 1.6 million barrels per day, according to the International Energy Agency.

While India’s imports are still only a quarter of that, the sharp rise since the war began is a potential source of friction between Washington and New Delhi.

The US recognizes India’s need for affordable energy, but “we are looking for allies and partners so that they do not increase their purchases of Russian energy,” Secretary of State Antony Blinken said after a meeting of defense and foreign ministers. from the US and India in April.

Meanwhile, the US and its European allies are engaged in “extremely active” discussions about coordinating measures, perhaps forming a cartel, to try to set a price cap on Russian oil, the Treasury secretary said. Janet Yellen, at a Senate Finance Committee meeting on Tuesday.

The goal would be to keep Russian oil flowing on the world market to prevent crude prices, already up 60 percent this year, from rising further, he said.

“Absolutely, the goal is to limit revenue going to Russia,” Yellen said, indicating the exact strategy had not yet been decided.

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