The West’s sanctions are making the transport of Russian oil more expensive and making the raw material less attractive for trading partners. Getty Images
In view of Western sanctions, India is increasingly shying away from cheap Russian oil imports.
Instead, China is buying more oil from Russia, but in the long term the punitive measures against shipping companies that ship raw materials could also make imports into the People’s Republic more difficult.
Despite Russia’s oil discount policy, Moscow’s prices are considered too high in Beijing.
With India cutting back on Russian oil imports, another major power is stepping in to fill the gap: China is on track to buy record amounts of crude oil from Russia this month.
Like the US news agency “Bloomberg” citing raw materials market analyst Kpler, the People’s Republic expects ship deliveries of 1.7 million barrels a day soon. Imports of Sokol oil, which is otherwise popular in India, could increase threefold compared to the previous month. With imports of 379,000 barrels, Sokol will reach a new all-time high. The East Siberia-Pacific pipeline could also pump more oil to China than it has since January 2023.
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Western sanctions are making Russian oil trade more difficult
On the one hand, the imports clearly demonstrate the deepening trade partnership between Moscow and Beijing – “a model of the relations of major countries,” as China’s Foreign Minister Wang Yi recently called it.
But on the other hand, the increase in Chinese imports indicates declining purchases by Indian buyers. In view of the sanctions packages imposed by Western states against Russia, they are reluctant to make further purchases.
Since the expansion of Russia’s war of aggression against Ukraine in February 2022, the country in South Asia has developed into the most important buyer market for Russian products. However, Russia has recently found it increasingly difficult to maintain the favorable discounts and thus provide India with attractive purchasing conditions.
At the same time, the West has tightened its sanctions and is also taking action against countries that help Russia to circumvent sanctions. For example, by mid-February, authorities had targeted 50 tankers for transporting Russian crude oil above the $60 price cap set by the G7 nations. As a result of punitive measures that also hit the Russian state shipping company Sovcomflot, the company’s activities decreased, according to “Bloomberg“.
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The West is making it more difficult for potential importers to find tankers that transport Russian oil across the sea. This increases freight costs and Russian oil loses its incentive to buy.
Russia responded by increasing its discount on Urals oil by $4 per barrel in February, making the grade cheaper. In the same month, Indian oil imports fell by 420,000 barrels per day. According to “Bloomberg”, the import costs on the Russian side are 20 percent lower than the export price. And although China is buying more and more Russian oil, the agency says, Moscow’s prices there are considered too high.
Because China is not immune to the secondary sanctions of the United States and its allies, China’s banks, for example, may shy away from entering into oil trade with Russia.
This text was translated from English by Marlon Jungjohann. You can find the original article here.