Key Takeaways:
- The United States imports Indian oil products made from refined Russian oil
- Russia and China have increased their oil imports from Russia following the outbreak of the war in Ukraine
- Major Indian refiners have made billions re-selling Russian oil in the Western markets, including in the US and Europe
YEREVAN (CoinChapter.com) — It may seem that the United States is leading the efforts to “punish” Russia for its invasion of Ukraine, but its actions tell a different story. Although it has imposed sanctions and a price cap on Kremlin’s oil, the Biden Administration continues to purchase it. The US is the largest buyer of petroleum products from India made using Russian crude oil.
New York purchased around 89,000 barrels a day of gasoline and diesel in January 2023 from India, Bloomberg reported quoting recent data by market analytics company Kpler. Per the report, these petroleum products came from Russian crude oil after India ramped up its purchase from Moscow at discounted prices.
The data not only shows how ineffective the US-led sanctions have been but also brings out the hypocrisy of the Biden Administration. Washington has criticized New Delhi for continuing to purchase oil from Russia and pressurized it to join its efforts to cripple Russia’s economy. However, it is now clear that the United States is a direct beneficiary of the Indian crude oil imports from the Kremlin as they end up in New York.
Meanwhile, the G7 nations, along with Australia and the European Union, imposed a $60 per barrel market cap on Russian oil. The EU also announced it will impose a ban on all Russian refined oil products.
In response, Russian President Vladimir Putin said his country will completely ban the sale of oil to countries that have introduced a price cap on its exports.
Recommended: Are US and EU Hypocrite While Treating Russia Like “Pariah State?”
Indian oil imports from Russia are on the rise
For the first time, India imported a record number of one million barrels per day of Russian crude oil in December 2022. According to energy cargo tracker Vortexa, Indian oil imports from Russia peaked following Kemlin’s invasion of Ukraine in February 2022.
Within months, India’s oil purchase from Russia shot up from less than 1% to over 20%. Currently, Russia accounts for more than 25% of the total crude oil imports in the country.
After the United States and the European Union imposed hard-hitting sanctions on Russia, Moscow offered its crude oil at discounted prices to its Asian partners. India and China became the largest beneficiaries of these discounts.
While China was already the largest importer of Russian crude even before the war began, India ramped up its purchases as well. As a result, Indian refiners bought crude at less than $60 a barrel. This came as a massive discount at a time when oil prices had shot up from around $70 a barrel in November 2021 to $116 a barrel in July 2022.
The demand coming from Asia helped Russia fight off the Western sanctions. However, to say that India saved Russia from an economic collapse would be wrong. One can give that credit to the West as well.
While Europe has continued to import Russian oil, the United States became the largest purchaser of Indian refineries. As the Bloomberg report verified, over 40% of New York’s oil imports came from India, supplying indirect support to Russia’s war efforts.
Russia accounts for 11% of global oil production, supplying 10 million barrels a day. This amounts to 3 billion barrels in a month, which the world cannot do without.
Indian private refiners profit from cheap Russian crude
While India has increased oil imports from Russia thanks to the heavy discounts it received, the Indian public is yet to feel the benefits. Meanwhile, private refineries are making a killing from it.
Giants like Reliance Industries and Indo-Russian venture Nayara Energy purchased over 60% of the discounted oil from Russia. However, rather than cater to the local market, they refine it and re-sell it to European and American markets.
To put things in perspective, Reliance’s crude purchases from Russia before the war in Ukraine were just 5%. However, since the war, it now imports one-third of its oil from Russia. Between April and November 2022, the Indian giant, which operates the world’s largest refining complex, imported a record 3 million tons from Russia. In the whole of 2021-2022, it imported just 1.6 million tons.
In contrast, public sector refiners such as Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum can grab a much smaller share of discounted Russian oil. However, they supply over 90% of the domestic fuel demand.
Hence, it is not the Indian public that benefits from cheap Russian oil but the Western countries that have supposedly imposed the sanctions.
Moreover, the United Kingdom has also increased its oil imports from India. Like the United States, the country is indirectly buying Russian oil through private Indian players.
Neither have the Biden Administration’s recent gimmicks ended the war in Ukraine, nor have they crippled Russia’s economy.
