(Bloomberg) — India is playing an increasingly important role in global oil markets by buying more and more cheap Russian oil and refining it into fuel for Europe and the United States.
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Yet New Delhi has faced little public backlash as it juggles the West’s twin goals of cushioning the oil supply shock as well as reducing Moscow’s energy revenues. And as Europe imposes sanctions on us, India is becoming more central to the global oil map that has been redrawn by Vladimir Putin’s year-long war in Ukraine.
“US Treasury officials have two main goals: keeping the market well supplied and depriving Russia of oil revenue,” said Ben Cahill, a senior fellow at the Center for Strategic and International Studies, a Washington think tank. “They know that Indian and Chinese refiners can make huge margins by buying subsidized Russian crude and exporting the products at market prices. They’re fine with it.
India exported nearly 89,000 barrels per day of gasoline and diesel to New York last month, the highest in nearly four years, according to data intelligence firm Kepler. Daily low-sulphur diesel flows to Europe stood at 172,000 barrels in January, the highest since October 2021.
The Asian nation is expected to grow in importance after new EU sanctions on Russian petroleum exports take effect from Sunday. The ban will remove vast quantities of diesel from the market and see more consumers, particularly in Europe, tap Asia to fill the supply gap.
This would make cheap Russian oil even more attractive to India, which relies on imports to meet about 85% of its crude needs. The country’s refiners, including state-run processors responsible for meeting domestic demand, increased exports last year to benefit from higher international prices.
fuel the west
“India is a net exporter of the refined product and much of this will help ease the current glut in the West,” said Warren Patterson, Singapore-based head of commodity strategy at ING Grope NV. “It is very clear that an increasing portion of the feedstock used for this product originates from Russia.”
Under EU guidelines, India is probably operating within the rules. When Russian crude is processed into fuel in a country outside the bloc, such as India, the refined products can be delivered to the European Union because they are not considered to be of Russian origin.
Serena Huang, principal Asia analyst at Vortex Ltd., said the Group of Seven nations wanted to cut Moscow’s revenue as much as possible, but they also had an interest in ensuring Russia’s oil and refined products kept flowing to avoid a global supply crisis. Can be saved ,
A key aspect of the mechanism to reduce revenue to the Kremlin and keep some oil on the market has been the price cap on Russian crude, a measure that was put in place by the US. India has not said publicly whether the country will or will not comply with the limit, but sanctions have pushed oil from OPEC+ producers below the $60 a barrel cap.
A US National Security Council spokesman said countries, including India, could take advantage to keep energy markets stable, while limiting the Kremlin’s revenues.
“India’s willingness to buy more Russian crude at a deep discount is a feature, not a bug, of Western plans to inflict economic pain on Putin,” said Jason Bordoff, founding director of the Center on Global. Former advisor on energy policy at Columbia University and in the Obama administration.
Officials and executives from countries and companies including Saudi Arabia, the United Arab Emirates, the US and Abu Dhabi National Oil Company are gathering in Bangalore on Monday for a three-day energy forum organized with India’s Ministry of Petroleum and Natural Gas.
– With assistance from Alberto Nardelli, Jennifer Jacobs, Serene Cheong and Sanjit Das.
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