Pressure from Western nations to prevent India and China from importing large quantities of Russian crude is diminishing, according to cargo tracker Vortexa.

India and China are the two major countries that have ramped up imports of Russian Urals since Russia invaded Ukraine, Eurasia Group’s director Henning Gloystein said at a webinar organised by Vortexa yesterday.

The US and its Western allies are unlikely to impose any secondary sanctions on India and China, even if they continue to buy Russian crude at a price higher than the G7’s price cap, Gloystein said. G7 countries, and especially the US, are in no position to derail the strategic Indo-Pacific partnership by imposing secondary sanctions on India, he added.

Similarly, the US administration will prefer to avoid worsening its already strained relationship with China by imposing sanctions, Gloystein said.

With free rein from the West, India and China will be in a good position to negotiate substantial discounts on their crude purchases from Russia, Vortexa’s chief economist David Wech said.

By importing discounted Russian crude, Indian refineries could refine it and sell it on as non-Russian oil products to EU importers with high margins. India may also import diesel directly from Russia and use it for domestic consumption, Wech said. He thinks that surplus Russian diesel could be re-exported to EU countries.

The EU’s ban on imports of refined Russian oil products kicked in with a hard deadline on 5 February and Vortexa has not picked up any gasoil and diesel cargo inflows to the ARA from Russia so far this month.

Russia was previously the ARA’s top import source for diesel and gasoil imports, with 22% in January, and 31% in December.

So far in February, the ARA has instead pulled large volumes of gasoil and diesel from far-away Indian ports (15% of total) and China (14%), and smaller volumes from a range of other sources including Japan (9%), the US and South Korea (7%).

Turkey, meanwhile, has reduced crude imports from Russia since EU sanctions on Russian seaborne crude imports came into force in December, Wech added. Turkish imports of Russian crude oil have come down from peak levels of 400,000 b/d in October to around 75,000 b/d in January, Vortexa data shows.

Massive pressure from NATO members could have forced Turkey to reduce its appetite for Russian crude, Gloystein argues. Turkey, while a member of NATO, has largely stayed away from backing sanctions on Russia.

Around 11% of all the oil being shipped globally is of Russian origin, up from 8% in July last year, Wech said.

Ships sailing long-haul distances from Russia to destinations like India or China could explain why there is now more Russian on the water. However, these high volumes of Russian oil could also reflect that Russia is struggling to find new alternative buyers, Wech added.
Source: ENGINE, https://engine.online/news-single?postId=17856, By Nithin Chandran