India’s appetite for cheap Russian oil is growing, even as the West continues to hit Moscow with unprecedented sanctions.
Russian crude flows to India expected to reach 3.36 million metric tons in May, according to Refinitiv estimates. This is nearly 9 times higher than the 2021 monthly average of 382,500 metric tons.
Overall, the country has received 4.8 million metric tons of Russian oil at a discount since the start of the war in Ukraine, Refinitiv added. Urals oil from Russia is currently trading at around $95 a barrel, while global benchmark Brent crude is above $119 a barrel.
Part of the reason for the price disparity: the West shunned Russian oil. On Monday, the EU agreed to ban 90% of Russian oil imports by the end of the year. Europe is the biggest buyer of Russian energy.
The United States, Canada, the United Kingdom and Australia have already banned imports.
An embargo on a huge importer like Europe would put pressure on the Russian economy, but Moscow has found other buyers in Asia.
India, which imports 80% of its oil, usually only buys around 2-3% From Russia. But with soaring oil prices this year, the government has steadily increased its inflow from Moscow, taking advantage of deep discounts.
According to Refinitiv, Russian crude flows to India soared to 1.01 million metric tons in April from 430,000 metric tons in March.
India’s Petroleum and Natural Gas Ministry did not immediately respond to a question about the impact the partial EU ban will have on the South Asian economy’s oil ties with Moscow.
Earlier in May, India played down the peak in imports. In a statement, the Ministry of Petroleum and Natural Gas said the country imports oil from around the world, including a significant volume from the United States.
“Despite attempts to present it otherwise, Russia’s energy purchases remain miniscule compared to India’s total consumption,” the ministry said in a statement. “India’s legitimate energy transactions cannot be politicized,” he added.
The world’s largest democracy has refrained from taking a strong stance against Moscow over the war in Ukraine. Russia and India have a long history of friendly relations, dating back to the Soviet era when the USSR helped India win its 1971 war with Pakistan.
India is not the only Asian giant to buy Russian oil. China, historically the biggest buyer of Russian oil, is also expected to shop.
OilX, which uses industry and satellite data to track oil production and flows, found that Chinese imports from Russia by pipeline and sea rose by 175,000 barrels a day in April, an increase of 11% compared to average volumes in 2021. Maritime imports are increasing. more strongly in May, according to the first data.
Demand is expected to rise as the world’s second-largest economy begins to ease its tough Covid-related restrictions in major cities.
As Asia’s purchases of Russian crude increase, the EU on Monday decided to block most of it by the end of this year.
Russian crude accounted for 27% of the bloc’s imports in 2021, according to Eurostat.
Russian oil delivered by tankers would be banned, while an exemption will be made for the southern section of the Druzhba pipeline, European Commission President Ursula von der Leyen told a press conference.
The northern section of the pipeline serves Poland and Germany, which have accepted the embargo. The southern part goes to Hungary, Slovakia and the Czech Republic and accounts for 10% of Russian oil imports.
After the embargo, Moscow may seek new customers more aggressively, but it won’t be easy.
A significant portion of Russia’s oil exports to Europe transits to the bloc via pipelines. Rerouting those barrels to Asian markets would require expensive new infrastructure that would take years to build.
– CNN’s Julia Horowitz and Vedika Sud contributed to this report