India is playing an increasingly important role in supplying global oil markets, buying increasing amounts of cheap Russian oil, which it processes into fuel for Europe and the United States, Bloomberg reports.

However, the authorities in New Delhi are not criticized for helping to achieve the two main goals of the West: reducing Moscow’s energy revenues and avoiding a supply shock in the oil market. As Europe tightens sanctions, India will become increasingly important in the global oil market, Agerpres notes.

“U.S. Treasury Department officials pursue two main goals: to maintain supply in the market and to deprive Russia of oil revenues. They know that Indian and Chinese oil companies can make a lot of money by buying cheap Russian oil and exporting refined products at market prices. And I agree with that,” says Ben Cahill, an analyst at the Center for Strategic and International Studies, an American think tank.

India supplied about 89,000 barrels of gasoline and diesel to New York last month, the most in four years, according to data from analyst firm Kpler. In addition, diesel exports to Europe rose to 172,000 barrels per day in January, the highest level since October 2021.

India’s importance will increase after new EU sanctions against Russian oil exports come into force on Sunday. This embargo will remove a lot of diesel from the market, and more consumers, especially in Europe, will turn to Asian refiners to cover the supply shortfall. This will make Russian oil even more attractive to India, which relies on imports for 85% of its oil needs.

“It is clear that the raw materials come from Russia”

“India is a net exporter of refined products and a large part of these volumes will go to the West to resolve the current tense situation. It is clear that a large share of the raw materials for these products comes from Russia,” says Warren Patterson, an analyst at ING Groep NV.

According to EU rules, India is likely to operate within the rules. When Russian oil is processed into fuel in a country outside the EU bloc, the refined products can be shipped to the EU because they are not considered Russian.

The group of highly industrialized nations wants to reduce Moscow’s revenues, but at the same time they are interested in keeping Russian oil and oil products on the world market, says Serena Huang, an analyst at Vortexa Ltd. A crucial component of this mechanism is the Russian crude oil price ceiling. India has not publicly announced whether it is complying with the ceiling or not, but Western sanctions have caused the price of Russian oil to fall below $60 a year.

A US National Security Council official said the price cap was put in place so that countries like India could continue to supply the energy market while limiting the Kremlin’s revenue.

“India’s willingness to buy more Russian oil at low prices is a central feature, not a flaw, in the Western plan to impose economic sanctions against Putin without harming them,” said Jason Bordoff, director of the Columbia-based Center for Global Energy Policy. University and former adviser in the Obama administration. (photo source Dreamstime.com)

Follow the latest developments from The 347th day of the war in Ukraine LIVETEXT on HOTNEWS.RO.