Russian oil exports back above pre-Ukraine war levels as India and China buy 90%

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Russian crude oil exports are back above levels seen before Vladimir Putin’s invasion of Ukraine, despite the ratcheting up of Western sanctions, new data shows.

India and China now account for 90 per cent of Russia’s seaborne crude oil exports, according to figures shared with The Independent by commodities tracking firm Kpler.

The Asian giants are each buying an average of 1.5 million barrels per day (bpd), absorbing the shortfall in exports to European nations that previously accounted for two-thirds of Russian crude.

Despite Western sanctions designed to stop funds reaching Vladimir Putin’s war chest following his Ukraine invasion, Russia’s crude oil exports have actually risen from 3.35 million bpd in 2022 to 3.5 million in the first quarter of 2023, Kpler said. After India and China, the two largest buyers of Russian crude are now Turkey and Bulgaria.

From importing a mere 1 per cent of its total oil requirements from Russia in 2021, India – the world’s third-largest oil importer – has dramatically ramped up its business with Moscow, buying 25 per cent of its oil from Russia in 2022 and 51 per cent in the first quarter of 2023. Kpler said India is on track to be purchasing Russian oil at a record rate of 1.9 million bpd for the month of March.

China was already the top destination for Russian crude prior to the invasion of Ukraine, but has increased its reliance on Moscow further, and now imports 36 per cent of its crude oil from Russia, up from 25 per cent in 2021.

“Both countries are now accounting for 90 per cent of Russia’s seaborne crude oil. This is an indisputable number as this percentage increases even more when you take into account pipeline flows to China,” lead oil analyst of Kpler Matt Smith tells The Independent.

While volumes of Russian oil exports have risen, the heavily discounted rates Moscow is offering to India and China mean revenues are significantly down year-on-year.

The International Energy Agency (IEA) said on Friday that although Russian oil exports hit their highest level in almost three years in March, revenues of $12.7bn are still 43 per cent down on the same period in 2022.

“Europe is taking a hit because oil prices are higher than if there was never the Russia-Ukraine conflict and subsequent sanctions, but this pales in comparison to the discount that Russia is having to offer its crude at – meaning much lower revenues,” Mr Smith said.

China has remained one of Russia’s closest allies throughout the conflict in Ukraine, while India has walked a delicate tightrope of neither embracing Moscow nor outright criticising Mr Putin’s invasion. New Delhi also strongly resisted pressure to join the West in imposing economic sanctions, arguing it had to put its domestic development needs and the interests of its own people first.

Bruno Macaes, an author on international affairs and former Portuguese secretary of state for European affairs, told The Independent it is hard to be too critical of India for importing cheap Russian oil, but the real problem is the lack of any criticism from a humanitarian or geopolitical perspective.

“I have not found any single critical sentence from any Indian official criticising the invasion,” he said. “Whereas it is very easy to find such critical quotes from Chinese officials, which is extraordinary. The tone of even China’s military officials is really more critical than the tone of Indian officials.”

Sanjay Kumar Kar, a professor at the Rajiv Gandhi Institute of Petroleum Technology (RGIPT), told The Independent that Russian oil important were “good for the [Indian] economy”. Russia, meanwhile, is benefitting from the oil-intensive requirements of India and China as huge developing nations, while it “aims to return to pre-war oil sales volumes”. In other words, it’s a win-win situation for the two sides.

Last year in December, the Group of Seven (G7) nations and the EU agreed on a $60 per barrel price cap on Russian seaborne crude oil. The cap bans the shipping, financing or insuring of Russia’s seaborne crude if it is sold above the cap.

Another round of EU sanctions on Russian refined products took effect in February, expanding the measures beyond simply crude oil.

Lauri Myllyvirta, co-founder and lead analyst at Research on Energy and Clean Air (CREA), told The Independent that volumes are expected to stay at or above the levels preceding the Ukraine invasion unless there is an outright ban on tankers owned or insured in the EU and G7 carrying Russian oil.

“If this approach is properly implemented, the large volume of imports of Russian oil to China and India would not be a problem,” he said.

However, the price cap coalition has failed to plug a major enforcement gap in the Pacific trade from Russia’s Far Eastern ports to China, where price benchmarks for Russian crude oil have stayed above the level of the cap for most of the time since the policy was introduced, he said.

India, the current G20 host, has so far struggled to bridge the deep divisions between major economies over the Ukraine conflict. A meeting of G20 foreign ministers in Delhi last month failed to agree a joint communique for this reason.

In September, Delhi will host the main leaders’ summit of the G20 calendar, an event that could put Mr Putin and China’s Xi Jinping in the same room as the US’s Joe Biden and other Western leaders.

“The G20 is really an important soft power moment for India,” Mr Macaes says. “The G20 is placing a little bit of pressure [on India’s Ukraine position] because it’s threatening to destroy a really important initiative for India.

“Maybe India is realising that it needs to take a stronger position. Indonesia got away with having a successful G20 in part because it had a principled position on Ukraine.”