As of: March 2, 2024, 4:50 a.m
By: Lars-Eric Nievelstein
Comments
Press
Split
Because of Western sanctions, Russia gave India and China heavy discounts on oil purchases.
Now the country is turning this back.
India reacts – with a look to the Middle East.
New Delhi - After Western industrialized nations imposed a variety of sanctions on Russia and turned away from Russian oil, Russia could rely on other countries to step into the breach.
One of them was India.
As the US news channel
CNN
recently reported, India took 13 times as much Russian oil last year as it did before the start of the Ukraine war.
But now the West has tightened sanctions again and India is distancing itself from Russia.
USA imposes new sanctions against Russia – oil trade with India affected
“Today I am announcing more than 500 new sanctions against Russia over its ongoing war of conquest against Ukraine,” said US President Joe Biden in a statement from the White House.
It is one of the largest sanctions packages since the beginning of the war; it targets the financial sector, the arms industry, trade and sanctions avoiders on “several continents”.
Hardeep Singh Puri, India's Minister for Petroleum and Natural Gas, at a press conference in New Delhi.
The minister had announced that India would always look for the cheapest supplier of oil.
© IMAGO / Hindustan Times
The measures that the USA is taking regarding the price of oil are particularly important in this context.
For over two years, the Western G7 nations have been working to ensure that the price at which Russia can sell its oil remains limited.
The price limit is 60 US dollars (around 55 euros) - Russian companies are always looking for new methods to somehow circumvent this limit.
One of these companies is Russia's tank giant Sovcomflot, whose fleet now has 14 new tankers under sanctions.
India steps in as a buyer – discounts fall
India plays a special role in this dynamic surrounding Russian oil and Western sanctions.
Firstly, this is because Russia has to get rid of the oil that the West is no longer buying somewhere - countries like India and China had received hefty discounts in order to step in for Western countries.
Business Insider
reported that Rosneft, for example, had offered a discount of eight to nine US dollars (around eight euros) per barrel on prices in Dubai.
India had struck.
For the future, Rosneft had significantly reduced this discount to between three and 3.50 dollars, around 2.75 to 3.25 euros.
Secondly, trade with India is important for Russia because it enables “oil laundering”.
Using a “shadow fleet,” Russia diverts its oil via India to the United States and other Western countries.
The Kremlin followed a similar practice in the diamond trade.
The explanation: Ships store the oil on the high seas in order to then sell it at higher prices using forged documents.
Russia's oil and gas revenues fell significantly in 2023.
Indian minister warns that if sanctions are breached, trade with Russia will end
However, India did not step in as a buyer out of loyalty to Russia.
A few years ago, Iraq was India's best oil supplier, before that it was Saudi Arabia - India is always concerned with the best price.
According to the
Reuters
news agency , Indian refiners are currently concerned about the new Western sanctions.
It could become more difficult to find ships to transport Russian crude oil in the future, and freight costs could also rise.
My news
Traffic light plans for pensions are presented: Read what we know about Pension Package II
Auto supplier from southern Germany is insolvent: 5,000 jobs at risk
Over 600 euros more: Read criticism of record diet increase for MPs
“Overreaching”: President of the Social Court is tough on the court reading with citizens’ money
Experts are sounding the alarm: traffic light plans could cause contribution rates to rise massively
Traditional company from Rhineland-Palatinate has to lay off 100 employees
All of these factors could erode the discount for oil from Russia.
In that case, India would have no problem turning back to the Middle East to get cheaper oil.
Hardeep Singh Puri, India's Minister for Petroleum and Natural Gas, had already made it clear that Indian companies would always secure the cheapest crude oil available.
If sanctions violations become apparent, Indian trade would turn away from Russia entirely.
Immune to Western sanctions?
Recently, Russia surprised with astonishing figures about its economic power.
Apart from the fact that the actual credibility of these figures is difficult to verify, Western experts attributed this to the country's war economy.
The more ammunition and tanks Russia produces, the more the economy grows - this is problematic because this productivity does not flow into the country's future, but literally evaporates in Ukraine.
Russia is showing the first signs of economic decline.
Recently, several major Chinese banks also turned away from Russia.
With material from Reuters