The article examines India’s rising imports of Russian oil and the probable circumvention of Russian oil-related sanctions.
Why is this in the news?
- An EU parliamentarian accused India of benefitting from cheap Russian energy while indirectly boosting Russia’s economy.
- India defended its acquisition by emphasising its energy needs as well as the issues of increasing prices as a result of its dependency on energy imports and severe poverty levels.
Sanctions against Russian oil are one of the reasons.
- Following Russia’s invasion of Ukraine, Western countries and Europe sought to lessen their reliance on Russian energy imports in order to damage Russia’s economy.
- Germany halted the construction of the Nord Stream natural gas pipeline, and Canada and the United States prohibited the import of Russian crude oil.
- Russia was sanctioned more severely, including a “price cap” on trading Russian oil above $60 per barrel.
- The price ceiling was designed to harm Moscow’s economy and limit Moscow’s capacity to pay the Ukrainian war.
- In response, Russia increased its oil supplies to India and China.
India’s role in supplying the energy needs of the West
- India, which is free from Russian oil sanctions, has seen a major increase in gasoline imports from Russia, which is subsequently processed and shipped to Europe and the United States.
- Once refined from Russian crude, the oil is no longer recognised to be of Russian origin.
- India’s oil imports have assisted it in meeting its own energy needs while also assisting Western nations suffering energy issues as a result of the Russia-Ukraine conflict.
- India has become a net exporter of refined petroleum products, supplying the West with needed energy.
Imports from India have an impact on Western markets
- Indian refiners have increased their exports of refined petroleum products, such as diesel and vacuum petrol oil (VGO), to Europe and the United States.
- VGO is a refining feedstock that can be further processed to generate petrol, diesel and other fuel products.
- Diesel exports from India to Europe climbed by 12-16% in the previous fiscal year.
- The United States has emerged as a major destination for Indian VGO shipments, receiving 11,000-12,000 barrels per day (bpd), or 65-81% of India’s VGO exports.
- These Indian exports have contributed to the alleviation of energy scarcity and supply restrictions in Western markets.
Source: https://www.indiatoday.in/business/story/russian-oil-gets-backdoor-entry-europe-via-india-boosting-exports-ukraine-war-2356307-2023-04-06#:~:text=India's%20high%20imports%20of%20crude%20oil%20from%20Russia%20in%20fiscal,more%20than%20a%20year%20earlier.