2023-05-17 02:52:07
India’s purchases of Russian oil have come under the watchful eye of the European Union, which for the first time threatened to take “severe measures” against New Delhi, which resells Moscow’s oil as refined fuel including diesel to Europe, at a time when Western countries are moving to tighten sanctions on the Russian energy sector.
And India is one of the countries that buys more Russian oil during the last year, following the imposition of a set of economic sanctions on Moscow, aimed primarily at clamping down on the Russian energy sector as it has the largest revenue in the country.
These measures, which the European Union intends to take, are part of a broader sanctions package that is likely to target third countries to enhance trade with Russia, including India and China, in addition to an annex to recall certain countries and products.
And Russia has previously announced that its oil exports to India have increased 22 times in 2022, in an indication of its transformation into the giants of the Asian continent in the midst of the conflict in Ukraine.
How do you think Europe?
Speaking to the Financial Times, EU foreign policy chief Josep Borrell said:
The bloc understands that Indian refiners are buying large quantities of Russian crude oil before it is turned into fuel for sale in Europe, and the European Union must act to stop it.
For India to buy Russian oil, that’s normal (…) But if they use that in order to become a center where they refine Russian oil and sell us by-products, then we have to act.”
India has become one of the biggest buyers of Russian crude since the Ukraine war, its refiners raking in big profits by buying the now-banned low-priced crude from the European Union, before selling the fuel at its normal price to Europe.
New Delhi has come under fire from proponents of tougher sanctions against Russia, which they say have allowed Moscow to continue to earn large revenues from its oil sales.
Borrell raised the issue of buying Russian oil and then pumping it back to Europe during his meeting with Indian Foreign Minister S Jaishankar.
Indian Prime Minister Narendra Modi is also likely to come under pressure from G7 leaders at a summit in Japan where dealing with sanctions evasion will be a major topic of discussion.
Indian refineries use crude imported from several different countries, including Russia, which makes it difficult to determine the exact origin of a barrel of diesel or gasoline.
EU sanctions could target buyers of Indian refined fuel believed to be derived from Russian crude.
Last March, the Russian giant oil company, Rosneft, announced that it had signed a contract with an Indian partner to “significantly increase” shipments of Russian oil.
According to data from the Indian Ministry of Commerce, last year Russia became, for the first time in its history, one of the five main trading partners of India, while the volume of trade between the two countries amounted to $38.4 billion.
India is on course to become the largest supplier of refined fuel to Europe this month, while at the same time buying record amounts of Russian crude, according to data compiled by Bloomberg.
Difficulty tracking shipments
For his part, International Energy Adviser Amer Al-Shobaki believes, in statements to “Sky News Arabia”, that:
Although India is a major gateway for the sale of Russian oil products, it is very difficult to track shipments of Russian oil after it has been refined.
Al-Shobaki identified the consequences of the expected European measures towards India in a number of points, saying:
It is clear that Russian oil is leaking to European markets through refineries located in India, but it is also imported from a number of other countries, and therefore it is difficult to distinguish whether the oil derivatives exported from India are of Russian origin or not.
There are steps to rein in European buyers, as well as discussions that will take place between EU officials and the Indian government to ask them how to sell Russian oil and its products from India to Europe, and I think there will be accountability for oil buyers in Europe.
It must be recognized that this is what actually contributed to the current oil prices that the European Union enjoys, as more Russian oil and its products flow to the markets has contributed to the declines in a large part of oil prices recently, except for fears of economic recession.
Since the European bloc has taken serious decisions regarding Russian oil sold through India, Russia will lose a market, whatever it is through which oil and its Russian products are resold, and it is a consumer market that has become acquiring about a third of Russian oil exports, and therefore if Russia does not find other markets, it will of course affect on oil prices.
India greatly benefited from this situation, as Indian companies were blessed with lower buying prices and a discount of up to $30 per barrel, thus reaping huge profits from refining.
However, Europeans will face difficulty in obtaining petroleum products and will resort to other markets, which may raise the prices of those products.
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