India helping west meet it’s energy demand

Subject : International Relations

Concept :

The European Union’s (EU) foreign and security policy chief said the EU should crack down on India reselling Russian oil into Europe as refined fuel.

Import from Russia

Since Russian invasion of Ukraine, India has emerged as one of the biggest buyers of Russian oil.
India’s imports of Russian oil rose tenfold last year.
In 2021 Russian oil accounted for just 2% of India’s annual crude imports. That figure now stands at almost 20%.

Export to the west

The access to cheap crude oil has allowed the country’s refiners to register massive profits and export record-level refined petroleum products to Europe and the USA.
Indian refiners exported an average of around 284,000 barrels per day (bpd) of refined petroleum products to Europe in the December-April period, up from about 170,000 bpd in the year-ago period.

India’s defence

India has defended its purchase of oil by saying that given its huge reliance on energy imports and with millions living in poverty, it isn’t in a position to pay higher prices.
Further, Russian crude, if substantially transformed in a third country, is not treated as Russian anymore.

Sanctions against Russian oil

Soon after the Russian invasion of Ukraine, the West started to curtail their dependency on Moscow’s energy imports in a bid to squeeze its economy.
Germany : It suspended the launch of the new Nord Stream natural gas pipeline.
Canada and the US : Banned the import of Russian crude oil.
Group of seven (G7) :
They enforced a “price cap” on Russian crude.
They believed the price cap imposition would cripple Moscow’s economy and severely impact its ability to fund its battle against Ukraine.
However, Russia responded by increasing its oil exports to India and China.

How India is helping the West meet its energy demand?

As the sanctions imposed on the import of Russian oil aren’t applicable to India, the amount of fuel from Moscow entering the country has reached a record high.
This has allowed India to not only easily meet its own energy demands but also that of other countries.
A Bloomberg report noted that India is importing more and more oil from Moscow and refining it into fuel, which is being supplied to Europe and the US.
India’s diesel exports to the Europe rose 12-16% to 1,50,000-1,67,000 bpd in the last fiscal year.
India boosted its vacuum gas oil (VGO) shipments to the US.

Surge of prices

Currently, four factors are leading to a surge in the price of oil, coal, and other energy sources. These are:
the disruption of oil supply chains due to the US sanctions on Russia post the Russian invasion of Ukraine,
the weakening of the US-Saudi Arabia 1970s deal that led to the dollar becoming the world’s reserve currency and leading to the sale of oil and currencies other than the dollar,
high inflation in developed countries, including the US, Canada, Germany, and the UK, and
the US effort to create alternate supply chains excluding China.