Russian crude imports stirring up the pot
India’s crude oil purchases from Russia are skyrocketing much to the glee of Vladimir Putin, but this has set off distress calls from the West. Indian refiners bought as much as 25 million barrels of Russian crude in May; 8,00,000 barrels a day. This means imports from Russia have jumped 50 times since April. They now make up 10%, up from just 0.2% we imported from Russia before the Ukraine war began. Fitch predicts imports could soon increase to one million barrels a day, or 20% of India’s total imports. At a 30% discount, Russian Urals, that can be refined in India, has come as a windfall when international oil prices are on the rise.
There has been a steady murmur of protest from the West. The slew of sanctions, including a ban on import of Russian oil, is being undermined by India’s imports. This is bank-rolling the Russians and is indirectly helping the invaders prosecute an immoral war, they argue. The Indian government, however, has rightly defended its oil purchases to be in its national interests. India is a poor country, and it is seriously bleeding with 85% of its oil needs being imported at the current high prices. In the absence of any support from the West, India has the right to buy crude oil at the cheapest price possible.
There is another red flag. Some are worried that India is being used as a potential back door into Europe for Russian oil supplies. An oil watchdog has said 20% of Reliance’s Jamnagar refinery cargo left for the Suez Canal, indicating the destination was either the US or Europe. The source of the oil cargo is often disguised by blending the oil, or switching oil from Russian flagged ships.
The scale of this subterfuge is not known, but it is important that the government give the problem a serious look. India buying Russian crude for its own needs is one thing but becoming a conduit to Europe to beat the sanctions is another. International relations are at a very sensitive point today, and it is best if India plays its cards right.