Since March, when Russia’s invasion of Ukraine began, there has been a “substantial increase” in Russian oil deliveries to India, according to industry observers, and New Delhi seems prepared to acquire much more cheap oil from Moscow.
According to them, China, which is already Russia’s largest single importer, is widely expected to buy more oil from Russia at great discounts.
This could result in higher crude prices in the future.
India and China, two of the world’s largest oil importers, have been battling with rising petroleum costs since last year. Oil prices have been erratic in recent weeks, fluctuating between gains and losses, but they are still over 80% higher than they were a year ago.
“We expect China, and to a lesser extent India, will step up to purchase severely discounted Russian crude,” said Matt Smith, Kepler’s head oil analyst.
This would be in sharp contrast to the rhetoric of major foreign nations and corporations against Russian oil. The United States has imposed energy sanctions on Russia as a response to its aggressive and unlawful assault on Ukraine, while the United Kingdom promises to do so before the end of the year. The European Union is also debating whether or not to follow suit.
However, economists predict that sanctions would leave a vacuum in the market, with Russia holding excess crude that it will be unable to sell.
“Russian Urals crude is being offered at record discounts, but acceptance has been limited so far, with Asian oil importers sticking to the conventional Middle East, Latin American, and African sources for the most part,” the International Energy Agency reported on March 17. The major oil blend that Russia exports are Urals crude.