Reports: West Touts Rejecting Russian Oil While India, China, and Others Snap Up Supply

The United States and much of the West say they are trying to ween themselves off of Russian oil, but India, China, and other Asian countries are snapping up the supply, according to an Associated Press (AP) article published Monday.

A June 8 analysis from the Center for Strategic and International Studies explains why Russia is still benefiting from its lucrative oil and gas industries despite the virtue signaling from some nations:

The European Union has imposed a partial embargo on Russian crude oil and petroleum products, as well as a ban on shipping insurance for oil exports from Russia. But it may be hard to achieve its goal of taking Russian oil off the market and cutting Russian export revenue without hurting consumers in Europe and elsewhere.

The key question is whether EU sanctions will force Russian oil off the market or simply redirect it to other regions. Russia aims to reorient its oil and gas exports from Europe to Asia, principally India and China. So far it has been relatively successful. India may have imported nearly 800,000 b/d from Russia in May, and could buy even more this month from an extremely low base last year. India depends heavily on oil imports to meet domestic demand, and as a price-sensitive buyer, it has taken advantage of deeply discounted volumes from Russia. Russia has been forced to offer cargoes of Urals blend at $30 to $35 per barrel below Brent crude oil prices. Russian oil exports to China have also picked up, with China importing up to 1.1 million b/d in seaborne volumes last month, compared with a monthly average of around 800,000 b/d last year. Sinopec, Zhenhua Oil, and others appear to be ramping up purchases of Russian crude oil, particularly Russia’s ESPO blend.

There are limits to how much India and China can absorb, and Russia may not be able to redirect all of the roughly 1.6 million b/d in seaborne exports it previously sent to Europe. But Russian exports have proven fairly resilient in recent months, and there is good reason to believe that Indian and Chinese buyers will take advantage of the opportunity to secure discounted crude oil from Russia at a time of high prices.

AP covered another report from the Finland-based Centre for Research on Energy and Clean Air, released Monday, that said Russia earned 93 billion euros ($97.4 billion) in revenue from fossil fuel exports over the first 100 days since it invaded Ukraine.

This despite a fall in export amounts in May.

“Revenue from fossil fuel exports is the key enabler of Russia’s military buildup and aggression, providing 40% of federal budget revenue,” the report said.

AP reported:

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, Sri Lanka’s prime minister 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.

Prime Minister Ranil Wickremesinghe said 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-ton (99,000-ton) shipment of Russian crude to restart its only refinery.

Russia is also courting other countries, including Russian Ambassador Marat Pavlov who met with new Philippine President Ferdinand Marcos Jr. and offered him oil and gas imports, AP reported.

This diversification of export destinations is becoming mainstream, according to one expert. “It seems a distinct trend is becoming ingrained now,” said Matt Smith, lead analyst at Kpler who tracks Russian oil flows. He said India is the top buyer, with China second.

India’s foreign minister, Subrahmanyam Jaishankar, has defended Russian oil imports, Breitbart News reported.

“If India funding Russian oil is funding the war … tell me, then buying Russian gas [to Europe] is not funding the war?” Jaishankar said at a forum in Slovakia.

Germany, Poland, and the Netherlands were the EU’s top buyers of Russian crude oil in 2021, according to data from the Energy Information Administration, Reuters reported.

Follow Penny Starr on Twitter