Russia: limited damage to the economy. Oil exports transit through India to the West
The World Bank has warned that the Russian economy will contract by just 0.2% this year, much less than last year's 2.1% drop, thanks to an increase in oil exports to India and China.
India, in particular, sharply increased its purchases of Russian oil, with crude oil imports growing 1,500% in May, exceeding 2.15 million barrels per day.
But there is not only this . A report by the Center for Research on Energy and Clean Air (CREA) titled Laundromat: How the price cap coalition whitewashes Russian oil in third countries, revealed that Western countries bought $42 billion of recycled Russian crude in the form of various products oil from nations friendly to Russia, with India leading the other five countries. For example, India's diesel exports tripled to ~1,600,000 bpd in March 2023, compared to a year ago, making diesel a major component of India-EU trade.
“ Price cap coalition countries have increased imports of refined petroleum products from countries that have become the largest importers of Russian crude oil. This is an important loophole that may undermine the impact of the sanctions on Russia ,” the report reads. So, in the end, the sanctions have turned into a great opportunity for international intermediation for neutral countries like India who make money by acting as an "honest matchmaker" between the two opposing parties.
According to the CREA report, most of the petroleum products were exported from two ports in Gujarat, arguing that this could constitute a "circumvention of sanctions" unilaterally imposed by the US and Europe. India, in particular, has provided a back door for Russian oil imports to Britain. Some British buyers have effectively replaced direct imports from Russia with imports from Russian-fed refineries, thereby indirectly supporting the Russian oil industry.
Before the war started almost a year ago, it was quite rare for Indian refineries to process Russian crude. The refineries have always exported to Europe, but now they are exporting even more because their product is more attractive as diesel prices in Europe are higher, and they are also buying more Russian crude because Russia is offering steep discounts.
Kpler data revealed that the Jamnagar refinery on India's west coast imported 215 shiploads of crude and fuel oil from Russia during 2022, 4 times more than it purchased in the previous year. Meanwhile, the UK has imported a total of 10 million barrels of diesel and other refined products from Jamnagar since the start of the war, 2.5 times what it bought in 2021, with Trafigura, Shell Plc, BP Plc, PetroChina Co.) and the Indian multinational conglomerate Essar Group as the main buyers.
Western sanctions have therefore had an effect: that of inflating the portfolios of the groups that own Indian refineries. Another transfer of wealth not foreseen by Western politicians.
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The article Russia: limited damage to the economy. Oil exports transiting through India to the West come from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/russia-danni-limitati-alleconomia-lexport-transita-in-india-verso-loccidente/ on Fri, 09 Jun 2023 09:35:05 +0000.