New Delhi - India and other Asian nations are increasingly becoming a vital source of oil revenues for Moscow despite strong pressure from the U.S. and allies. EU had cut off energy imports from Russia in line with sanctions over its war on Ukraine in contrast to the Asian nations who are now increasing Russian oil purchases.

Such sales are boosting Russian export revenues at a time when Washington and allies are trying to limit financial flows supporting Moscow’s war effort.

India, has so far consumed 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.

Sri Lanka’s prime minister said on Saturday that the country might be compelled to buy more oil from Russia as he hunts desperately for fuel to keep the country running amid a dire economic crisis.

Since Russia’s invasion in late February, global oil prices have soared, giving refiners in India and other countries an added incentive to acquire Russian oil. Moscow is offering them at steep discounts of $30 to $35, compared with Brent crude and other international oil now trading at about $120 per barrel.

As shipments of Urals oil to much of Europe are cut, crude is instead flowing to Asia, where India has become the top buyer, followed by China. Ship tracking reports show Turkey is another key destination.

“People are realizing that India is such a refining hub, taking it at such a cheap price, refining it and sending it out as clean products because they can make such strong margins on that,” said Matt Smith, lead analyst at Kpler tracking Russian oil flows.

In May, some 30 Russian tankers loaded with crude made their way to Indian shores, unloading about 430,000 barrels per day. An average of just 60,000 barrels per day arrived in January-March, according to the Helsinki, Finland-based Centre for Research on Energy and Clean Air, an independent think tank.

Chinese state-owned and independent refiners also have stepped up purchases. In 2021, China was the largest single buyer of Russian oil, taking 1.6 million barrels per day on average, equally divided between pipeline and seaborne routes, according to the International Energy Agency.

Meanwhile, the U.S. and its European allies are engaged in “extremely active” discussions on coordinating measures, perhaps forming a cartel, to try to set a price cap on Russian oil, Treasury Secretary Janet Yellen told a Senate Finance Committee meeting on Tuesday.

India’s imports of crude from Russia rose from 100,000 barrels per day in February to 370,000 a day in April to 870,000 a day in May.

India’s exports of oil products like diesel have risen to 685,000 barrels per day from 580,000 barrels per day before the invasion of Ukraine. Much of its diesel exports are sold in Asia, but about 20% was shipped via the Suez Canal, headed for the Mediterranean or Atlantic, essentially Europe or the US, said Lauri Myllyvirta, a lead analyst at CREA.

China’s imports also have risen further this year, helping Russian President Vladimir Putin’s government record a current account surplus, the broadest measure of trade, of $96 billion for the four months ending in April.

It’s unclear if such exports might eventually be subject to sanctions meant to cut the cash flowing to Russia.
-AP