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India, China growing markets for shunned Russian oil

NEW DELHI (AP) – India and other Asian nations are becoming an increasingly vital source of oil revenues for Moscow despite strong pressure from the United States (US) not to increase their purchases, as the European Union (EU) and other allies cut off energy imports from Russia in line with sanctions over its war on Ukraine.

Such sales are boosting Russian export revenues at a time when Washington and allies are trying to limit financial flows supporting Moscow’s war effort.

India, an oil-hungry country of 1.4 billion people, has guzzled 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, like China, have also increased in recent months but to a lesser extent.

In an interview with the Associated Press (AP), Sri Lanka Prime Minister Ranil Wickremesinghe said he may be compelled to buy more oil from Russia as he hunts desperately for fuel to keep the country running amid a dire economic crisis.

Wickremesinghe said on Saturday said he would first look to other sources, but would be open to buying more crude from Moscow. In late May, Sri Lanka bought a 90,000-metric-tonne shipment of Russian crude to restart its only refinery.

A crude oil refinery in the Indian state of Gujarat. PHOTO: AP

Since Russia’s invasion in late February, global oil prices have soared, giving refiners in India and other countries an added incentive to tap oil Moscow is offering them at steep discounts of USD30 to USD35, compared with Brent crude and other international oil now trading at about USD120 per barrel.

Their importance to Russia rose after the 27-nation EU, the main market for fossil fuels that supply most of Moscow’s foreign income, agreed to stop most oil purchases by the end of this year.

“It seems a distinct trend is becoming ingrained now,” said lead analyst at Kpler tracking Russian oil flows Matt Smith. As shipments of Urals oil to much of Europe are cut, crude is instead flowing to Asia, where India has become the top buyer, followed by China. Ship tracking reports show Turkey is another key destination.

“People are realising that India is such a refining hub, taking it at such a cheap price, refining it and sending it out as clean products because they can make such strong margins on that,” Smith said.

In May, some 30 Russian tankers loaded with crude made their way to Indian shores, unloading about 430,000 barrels per day. An average of just 60,000 barrels per day arrived in January-March, according to the Helsinki, Finland-based Centre for Research on Energy and Clean Air, an independent think tank.

Chinese state-owned and independent refiners also have stepped up purchases. In 2021, China was the largest single buyer of Russian oil, taking 1.6 million barrels per day on average, equally divided between pipeline and seaborne routes, according to the International Energy Agency.

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

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