As it purchases more and more inexpensive Russian oil and refines it into gasoline for Europe and the US, India is playing an increasingly significant role in the world’s oil markets.
Russia crude
However, New Delhi hasn’t seen any backlash from the people since it’s achieving the dual objectives of the West, namely to reduce Moscow’s energy earnings and avert a disruption in the oil supply. India will only play a bigger role in the global energy map that Vladimir Putin’s year-long battle in Ukraine has redrawn as Europe intensifies its sanctions.
According to Ben Cahill, a senior scholar at the Center for Strategic and International Studies, a Washington-based think tank, “US Treasury officials have two basic goals: maintain the market well-supplied, and deprive Russia of oil money.” They are aware that by purchasing cheap Russian oil and selling goods at market pricing, Indian and Chinese refiners may generate higher margins. That’s acceptable to them.
According to data analytics company Kpler, India exported the most gasoline and diesel to New York last month about 89,000 barrels per day and it was the most in almost four years. January had the highest daily low-sulfur diesel shipments to Europe since October 2021 at 172,000 barrels per day.
Following the implementation of new European Union restrictions against Russian petroleum exports on Sunday, the significance of the Asian country is anticipated to increase. Due to the restriction, there won’t be as much diesel on the market, and more customers, particularly in Europe, will turn to Asia to make up the difference in supply.
India, which imports over 85% of its petroleum requirements, may find cheap Russian oil to be even more alluring as a result. The nation’s refiners increased exports last year to take advantage of better worldwide prices, including state-run processors that are in charge of satisfying local demand.
India is a leading exporter of refined goods, and much of this will travel to the West to assist relieve the present tightness, according to Warren Patterson, the head of commodities strategy at ING Groep NV, who is headquartered in Singapore. It’s obvious that a rising percentage of the feedstock utilised to make this product comes from Russia.
India most certainly follows EU regulations and is doing legally. The refined goods can be sent into the EU even if Russian crude was converted into fuel in a non-EU nation like India since they aren’t considered to be of Russian origin.
The Group of Seven countries want to reduce Moscow’s income as much as possible, but they also want to make sure that its oil and processed goods keep flowing to prevent a shortage of supplies worldwide, according to Serena Huang, chief Asia analyst at Vortexa Ltd.
A price ceiling on Russian crude, a move that was championed by the US, has been a significant component of the system to restrain revenues to the Kremlin and keep some oil on the market. India hasn’t made it clear whether it abides by the limits or not, but sanctions have pushed oil from the OPEC+ supplier below the $60 per barrel ceiling.
A spokeswoman for the US National Security Council claimed a price ceiling had been established that nations like India could use to stabilise the energy markets while reducing the Kremlin’s income.
The plan of Western countries to put economic pressure on Putin without putting it on themselves, according to Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University and a former adviser in the Obama administration, is facilitated by India’s willingness to purchase more Russian crude at a steeper discount.
A three-day energy forum that has been arranged by the petroleum and natural gas ministry of India will begin Monday in Bangalore and will bring together executives and officials from countries and organisations such as Saudi Arabia, the United Arab Emirates, the US, and Abu Dhabi National Oil Co.