Despite Western sanctions, Russian oil flow to India is increasing

India’s appetite for cheap Russian oil is growing even as the West continues to attack Moscow with unprecedented sanctions.

Russian oil flows to India are expected to reach 3.36 million metric tons in May, according to Refinitiv estimates. This is nearly 9x the monthly average of 382,500 metric tons in 2021.

Overall, the country has received 4.8 million metric tons of discounted Russian oil since the start of the war in Ukraine, Refinitiv added. Russian Urals oil currently trades at around $95 a barrel, while global benchmark Brent is above $119 a barrel.

Part of the reason for the price disparity: The West has avoided Russian oil. On Monday, the EU agreed to ban 90% of Russian oil imports by the end of the year. Europe is the biggest buyer of Russian energy.

The United States, Canada, the United Kingdom and Australia have already banned imports.

An embargo by a major importer such as Europe would increase pressure on the Russian economy, but Moscow has found other buyers in Asia.

India, which imports 80% of its oil, generally only buys about 2% to 3% from Russia. But with oil prices soaring this year, the government has steadily increased its entry from Moscow, taking advantage of deep discounts.

According to Refinitiv, oil flows from Russia to India rose to 1.01 million metric tons in April from 430,000 metric tons in March.

India’s Ministry of Oil and Natural Gas did not immediately respond to a question about the impact the EU’s partial ban will have on the South Asian economy’s oil ties to Moscow.

In early May, India minimized the import peak. In a statement, the Ministry of Oil and Natural Gas said the country imports oil from all over the world, including a significant amount from the United States.

“Despite attempts to portray it otherwise, Russia’s energy purchases remain minuscule compared to India’s total consumption,” the ministry said in a statement. “India’s legitimate energy transactions cannot be politicized,” he added.

The world’s largest democracy has refrained from taking a tough stance against Moscow because of the war in Ukraine.

Russia and India have a long history of friendly relations, dating back to the Soviet era, when the USSR helped India win its 1971 war with Pakistan.

India is not the only Asian giant buying Russian oil. China, historically the biggest buyer of Russian oil, is also expected to make purchases.

OilX, which uses industry and satellite data to track oil production and flows, found that China’s imports from Russia by pipeline and sea rose by 175,000 barrels a day in April — an increase of about 11% from to average volumes in 2021.

Seaborne imports are increasing more sharply in May, according to initial data.

Demand is expected to pick up as the world’s second-largest economy begins to ease its strict Covid-related restrictions in major cities.

EU moves forward with partial ban

While Asia’s purchase of Russian oil is on the rise, the EU on Monday decided to block most of it until the end of this year.

Russian oil accounted for 27% of the bloc’s imports in 2021, according to Eurostat.

Russian oil delivered by tankers will be banned, while an exemption will be made for the southern segment of the Druzhba pipeline, Ursula von der Leyen, president of the European Commission, told a news conference.

The northern segment of the pipeline serves Poland and Germany – which have agreed to the embargo. The southern part goes to Hungary, Slovakia and the Czech Republic and accounts for 10% of Russian oil imports.

After the embargo, Moscow can pursue new customers more aggressively, but it won’t be easy.

A significant portion of Russia’s oil exports to Europe reach the bloc through pipelines. Redirecting these barrels to Asian markets would require expensive new infrastructure that would take years to build.

— Julia Horowitz and Vedika Sud of CNN contributed to this report