Amid the Western sanctions against Russia, there is a looming energy crisis and inflation issue all over the world. Earlier this week, it was reported that India has bought over 3 million barrels of Russian crude oil at a heavily discounted price. Now, a report in Financial Times has stated that while European buyers avoid Russian cargoes of oil, India has almost quadrupled its purchase of Russian crude in recent days.
The report in FT states that Russia has sent over 360,000 barrels of crude oil per day to India so far in March, nearly 4 times higher than the average per day exports in 2021.
India, which does not have vast reserves of oil and natural gas and imports over 82% of crude oil and 45% of natural gas from other nations, has been considering all options to avoid the sanctions against Russia and get crude oil at a discounted price. India is the world’s third-largest energy-consuming country.
The FT report says, “India has snapped up multiple cargoes of Russian crude oil from traders as buyers in Europe shunned Russia’s commodities market following Western sanctions against Moscow.”
Kpler, a commodities data and analytics firm, has reportedly stated that India is expected to hit 203,000 barrels per day for the whole of March, based on shipment schedules. The report states that export data represents cargo that has been already loaded on ships and is en route to India.
Quoting Alex Booth, the head of research at Kpler, the report mentioned, “India typically buys CPC, a mixture blend of Kazakh and Russian crude, but the major increase in March shipments was for Russia’s flagship Ural crude, showing that India’s buyers have chosen discounts over ‘opinion’.”
“Already committed oil cargoes from Russia that cannot find buyers in Europe are being bought by India. Exports to India surged before any official announcement by New Delhi”, Booth added further.
‘The discounts are significant’, deals beneficial for India
Lars Barstad, the CEO of a New York-listed tanker company has been quoted by the FT report as saying, “the discounts on the Russian Urals for India was about $25-30 per barrel. Freight rates would add only $3-4 per barrel, making the trade economic for India.”
Though tanker and cargo companies may want to avoid Russian shipments to avoid sanctions, many are legally bound to deliver the cargoes under contract, the report says.
It is notable here that India and Russia have long-standing and deep trade ties, especially in the defence sector. Both countries have already decided to explore Rupee-Rouble trades, to reduce dependency on US dollars.
Russian oil company Rosneft owns a 49% stake in India’s Nayara Energy, which runs the nation’s second-largest oil refinery.
Earlier, it was reported that Indian Oil has bought the Russian crude at a significant discount from Vitol, reportedly 3 million barrels for May delivery.
The Western nations’ attempts to directly or indirectly persuade India against maintaining ties with Russia have been largely ignored, arguably because of India’s dependency on energy imports and the government’s commitment to keeping inflation in check. Western nations are already witnessing higher inflation and a steady scarcity of energy supplies, and supplies of other goods, due to their own sanctions against Russia.
“We are always exploring all possibilities in global energy markets because of the situation of importing our oil requirements. I don’t think Russia has been a major supplier,” MEA spokesperson Arindam Bagchi had stated recently. India gets most of its crude oil from Iraq, Saudi Arabia and UAE. Russia’s share has been just over 5%.
It is notable here that many Western powers, while themselves buying billions of dollars worth of oil, natural gas, uranium, palladium, wheat and other essential goods from Russia, have been giving statements indirectly condemning India’s trade links with Russia.
Russia asks India to invest in their country
Recently, Russian Russian Deputy Prime Minister Alexander Novak had talked with the Indian Minister of Petroleum and Natural Gas, Hardeep Singh Puri over the phone on March 11.
Deputy PM Novak said, “What we have is a particularly privileged strategic partnership; the leaders of our countries maintain regular contact. Mutually beneficial cooperation is actively promoted, including the Arctic LNG 2 and Sakhalin 1 projects. Gazprom supplies LNG to India, and Rosneft continues its systematic work with its Indian partners.”
“We are interested in further attracting Indian investment to the Russian oil and gas sector and expanding Russian companies’ sales networks in India”, Novak had added.
