New Delhi: India is assuming a greater significance in the global oil industry, as it purchases growing quantities of economical Russian oil and transforms it into fuel for the US and Europe. Despite this, Government of India has faced minimal criticism as it satisfies the West’s dual objectives of reducing Moscow’s energy income and averting an oil supply crisis.
What is up with India’s role in oil market?
With Europe increasing its sanctions, India’s role in the global oil market, which has been reshaped by Vladimir Putin’s conflict in Ukraine, is set to become even more crucial. Ben Cahill, a senior fellow with the Center for Strategic and International Studies, a Washington think tank said, “US treasury officials have two main goals: keep the market well supplied, and deprive Russia of oil revenue, they are aware that Indian and Chinese refiners can earn bigger margins by buying discounted Russian crude and exporting products at market prices. They’re fine with that.”
According to data intelligence firm Kpler, India exported approximately 89,000 barrels of gasoline and diesel per day to New York last month, marking the highest amount in nearly four years. Additionally, daily flows of low-sulfur diesel to Europe reached 172,000 barrels in January, the most since October 2021.
With the recent implementation of EU sanctions on Russian petroleum exports, India’s significance in the global oil market is expected to expand. This ban will result in a significant removal of diesel from the market, prompting more consumers, especially in Europe, to seek out Asia to fill the supply gap.
US seeks to affect Russian economy
This situation will make cheap Russian oil even more appealing to India, which heavily relies on imports to meet approximately 85% of its crude needs. Its refineries, including state-run processors tasked with meeting domestic demand, increased exports last year to take advantage of higher international prices.
The European Union (EU) guidelines allow India to function within the established rules. When Russia’s crude oil is processed into fuels in countries outside the EU, such as India, the refined products can be exported to the EU as they are not considered to be of Russian origin.
A spokesperson from the US National Security Council stated that a price cap has been established that countries like India can use to maintain stability in the energy markets while reducing the Russian government’s revenue. Leaders and representatives from countries and corporations such as Saudi Arabia, United Arab Emirates, the US, and Abu Dhabi National Oil Co. are set to convene in Bangalore for a three-day energy forum organized in partnership with India’s Ministry of Petroleum and Natural Gas.
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