Friday, 17 May, 2024
By: Yash Gupte
India leads all other so-called "Laundromat" nations in the export of crude products to the coalition countries, exporting nearly 3.8 million tons of oil products to the coalition countries. Image Source: IANS
According to the report, In the 12 months following Russia's invasion, Western nations that had mainly banned the imports of Russian oil imported oil products from nations that had expanded their imports of Russian crude oil to the tune of EUR 42 billion
According to the Centre for Research on Energy and Clean Air, a Helsinki based organisation in its report said that India is among the top 5 ‘Laundromat’ countries that buy Russian oil and sell processed goods to European nations, thus bypassing the European sanctions against Russia. The 5 Laundromat countries are India, China, Turkey, the UAE and Singapore. According to the report, In the 12 months following Russia's invasion, Western nations that had mainly banned the imports of Russian oil imported oil products from nations that had expanded their imports of Russian crude oil to the tune of EUR 42 billion. The EU, the majority of the G7 nations, and Australia have severely restricted their imports of Russian crude oil and oil products far into the second year of the full-scale invasion of Ukraine.
At the same time, these nations, which are all a part of the price-cap coalition with the aim of limiting Russia's fossil fuel export income, have dramatically expanded their imports of refined oil products from the nations that have grown to be the biggest buyers of Russian crude oil. The report further reveals that the price cap coalition countries increased their imports of refined oil products from China (+3.6 million tons or +94%), India (+0.3 million tons or +2%), Turkey (+1.8 million tons or +43%), the United Arab Emirates (+2.6 million tons or +23%), and Singapore (+1.8 million tons or +33%) one year after Russia invaded the Ukraine.
Imports of refined oil products from these five nations by price cap coalition nations increased in the year following Russia's invasion by +10 million tons (+26%) or EUR 18.7 billion (+80% in value terms). This shows that the European nations are easily and comfortably fulfilling their energy needs by indirectly purchasing the Russian oil. The report states that “Price cap coalition countries have increased imports of refined oil products from countries that have become the largest importers of Russian crude. This is a major loophole that can undermine the impact of the sanctions on Russia.”
India leads all other so-called "Laundromat" nations in the export of crude products to the coalition countries, exporting nearly 3.8 million tons of oil products to the coalition countries, which include the EU, the G-7 nations, Australia, and Japan. India in April continued to be the world's largest consumer of seaborne Russian crude for a fifth month.
Last month, Iraq was replaced by Russia, a longtime supplier of defence equipment, as India's main crude oil supplier. The total value of Russian imports into India surged by almost four times to $46.33 billion in fiscal year 2022-23. In 2022–2023, bilateral trade exceeded $40 billion, and in 2023–2024, it is anticipated to surpass $50 billion.
Source: Ministry of Commerce and Industry
India has been highly importing the Russian crude oil since the outbreak of Russia-Ukraine war in February 2022. The western nations had heavily sanctioned Russia and economically isolated it from the rest of the world. At such a point of time, Russia decided to export crude oil at cheaper prices. Both, India and Russia have benefitted from the cheap import of Russian crude oil as New Delhi has been importing oil at very cheaper rates, saving a lot on oil bills and Moscow has been able to counter the sanctions imposed by the western world.
Russia is making improvements to trade with India as part of a plan to increase trade with other Asian superpowers like China in order to reduce the effects of Western sanctions. Moscow is also attempting to deepen or preserve its ties with other South Asian nations. Most recently, it agreed to accept Yuan as payment for the construction of a nuclear power station in Bangladesh and talked about offering Pakistan subsidised oil exports.
“India will continue to buy oil from Russia", finance minister Nirmala Sitharaman had declared even as the West mounted pressure on New Delhi to isolate Moscow. True to her words, India has not only continued to buy oil at discounted rates from Russia, but has increased the intake by a whopping 4.7 times since April 2022. Not just oil, India-Russia overall trade has increased to a whopping five times since the outbreak of Russia-Ukraine war. India now imports twice as much crude oil from Russia as it does from Iraq, the country's traditional main oil supplier, reaching a new high of 1.64 million barrels per day in March. Prior to the start of the Russia-Ukraine conflict in February 2022, Russia had a market share of less than one percent in India's imports; by March 2022, that percentage had increased to 1.64 million barrels per day (bpd), or 34 percent.
The Indian port of Sikka in Gujarat is the world's largest importer of Russian seaborne crude oil and the greatest exporter of oil products to the price cap alliance nations. The refinery at Jamnagar is served by the port. From December 2022 to February 2023, petroleum products worth EUR 2.7 billion were exported from the port to the nations in the price cap coalition.
In comparison to the 12 months prior to the invasion, seaborne imports of Russian crude oil into China, India, Turkey, the United Arab Emirates (UAE), and Singapore increased by 140 percent in volume terms. Since the EU imposed a crude oil export ban until one year after the start of the war, these five Laundromat nations have contributed 70 percent of Russia's crude oil exports, with a total value of their imports of EUR 74.8 billion over the course of a year.
Despite criticism from the West, India has continued its trade relations with its erstwhile cold war partner. Time and again, India has defended its decision to buy discounted Russian oil citing national interests. The total annual bilateral trade between the two countries stood at $39.8 billion in 2022-23, $13.12 billion in 2021-22, and $8.14 billion in 2020-21. Pre-COVID, it was $10.11 billion in 2019-20, $8.22 billion in 2018-19, and $10.68 billion in 2017-18. In FY2021-22, India had a trade deficit of $6.61 billion with Russia.
