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India, China growing markets for shunned Russian oil

Such sales are increasing Russian export revenue at a time when the U.S. and allies are trying to limit financial flows supporting Moscow’s war on Ukraine.
A gas station in Mumbai, India, on Saturday. The country’s imports of Russian oil have sharply increased since the invasion of Ukraine in February.
A gas station in Mumbai, India, on Saturday. The country’s imports of Russian oil have sharply increased since the invasion of Ukraine in February.Rajanish Kakade / AP
/ Source: Associated Press

NEW DELHI — India and other Asian nations are becoming an increasingly vital source of oil revenue for Moscow despite strong pressure from the U.S. not to increase their purchases, as the European Union and other allies cut off energy imports from Russia in line with sanctions over its war on Ukraine.

Such sales are increasing Russian export revenue at a time when Washington and allies are trying to limit financial flows supporting Moscow’s war effort.

India, an oil-hungry country of 1.4 billion people, has guzzled nearly 60 million barrels of Russian oil in 2022 so far, compared with 12 million barrels in all of 2021, according to commodity data firm Kpler. Shipments to other Asian countries, like China, have also increased in recent months but to a lesser extent.

In an interview with The Associated Press, Sri Lanka’s prime minister said he may be compelled to buy more oil from Russia as he hunts desperately for fuel to keep the country running amid a dire economic crisis.

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Prime Minister Ranil Wickremesinghe said Saturday he would first look to other sources, but would be open to buying more crude from Moscow. In late May, Sri Lanka bought a 99,000-ton shipment of Russian crude to restart its only refinery.

Since Russia’s invasion in late February, global oil prices have soared, giving refiners in India and other countries an added incentive to tap oil Moscow is offering them at steep discounts of $30 to $35, compared with Brent crude and other international oil now trading at about $120 per barrel.

Lining up at a gas station in Colombo, Sri Lanka, on Saturday. The prime minister said he may be compelled to buy more oil from Russia as he hunts desperately for fuel to keep the country running amid a dire economic crisis.
Lining up at a gas station in Colombo, Sri Lanka, on Saturday. The prime minister said he may be compelled to buy more oil from Russia as he hunts desperately for fuel to keep the country running amid a dire economic crisis. Eranga Jayawardena / AP

Their importance to Russia rose after the 27-nation European Union, the main market for fossil fuels that supply most of Moscow’s foreign income, agreed to stop most oil purchases by the end of this year.

“It seems a distinct trend is becoming ingrained now,” said Matt Smith, lead analyst at Kpler tracking Russian oil flows. As shipments of Urals oil to much of Europe are cut, crude is instead flowing to Asia, where India has become the top buyer, followed by China. Ship tracking reports show Turkey is another key destination.

“People are realizing that India is such a refining hub, taking it at such a cheap price, refining it and sending it out as clean products because they can make such strong margins on that,” Smith said.

In May, some 30 Russian tankers loaded with crude made their way to Indian shores, unloading about 430,000 barrels per day. An average of just 60,000 barrels per day arrived in January-March, according to the Centre for Research on Energy and Clean Air, an independent think tank based in Helsinki.

Chinese state-owned and independent refiners have also stepped up purchases. In 2021, China was the largest single buyer of Russian oil, taking 1.6 million barrels per day on average, according to the International Energy Agency.

While India’s imports are still only about a quarter of that, the sharp increase since the war began is a potential source of friction between Washington and New Delhi.

The U.S. recognizes India’s need for affordable energy, but “we’re looking to allies and partners not to increase their purchases of Russian energy,” Secretary of State Antony Blinken said after a meeting of U.S. and Indian foreign and defense ministers in April.

Meanwhile, the U.S. and its European allies are engaged in “extremely active” discussions on coordinating measures, perhaps forming a cartel, to try to set a price cap on Russian oil, Treasury Secretary Janet Yellen told a Senate Finance Committee meeting on Tuesday.

The aim would be to keep Russian oil flowing into the global market to prevent crude oil prices, already up 60 percent this year, from surging still higher, she said.

“Absolutely, the objective is to limit the revenue going to Russia,” Yellen said, indicating the exact strategy had not yet been decided.