Russian Oil Sales Surge as China and India Exploit Bargain Prices

Russia has been bombarded with sanctions since it invaded Ukraine this February. But it turns out that Russian oil exports actually rose during the first 100 days of the war, according to a new report by the Center for Research on Energy and Clean Air (CREA). The growth was driven by both rising gas prices as well as imports from China and India, two energy-hungry Asian giants.

Russia Continues to Fuel Major Energy Importers

Russia is endowed with vast natural resources riches and a small population. And so it exports a range of fossil fuels, including coal, crude oil, refined petroleum products, and natural gas. It also supplies numerous countries with enriched uranium, which is used for nuclear power.

Longtime customers in Europe and East Asia continue to import Russian fuel, though many have begun the process of weaning themselves off of dependence on Moscow. Nonetheless, fossil fuel exports generated $97 billion in revenue for Russia from February 24 to June 3, 2022 — the first 100 days since its invasion of Ukraine.

Before the war, Germany was the largest importer of Russian energy. But as Germany has reduced its imports of Russian gas by 31 percent, according to CREA. As a result, China has surpassed Germany as the top importer of Russian oil and other fuels.

Along with China, France, Saudi Arabia, and the United Arab Emirates have also increased purchases of Russian fuel. But the growth in Russian fuel imports by these countries pales in comparison to the surge from India.

India Binges on Russian Oil

Prior to the Ukraine war, India imported only one percent of Russia’s crude oil exports. By May, India accounted for 18 percent of Russia’s crude oil exports. Russia is now the second-largest source of crude oil for India, taking the place of Saudi Arabia, according to analytics firm Kpler.

There’s a simple reason for the rapid rise in Indian purchases of Russian oil. Russian energy companies are offering steep discounts for purchasers. And that’s an offer few developing countries would be inclined to refuse.

India may be a large country, but its per capita income is low. The purchasing power of the average Indian is nowhere near that of Europeans or wealthier Asians.

There are also clear political benefits for Prime Minister Narendra Modi’s Hindu nationalist government. As fuel prices rise in other countries, Indian state-owned fuel companies have actually held back from increasing prices since April. On top of that, Indian refineries are also refining discounted Russian oil and re-exporting those oil products to the United States and Europe.

India’s purchases of Russian oil may also be driven by ideology. Like China, India is one of Russia’s top allies. And New Delhi has been asserting the independence of its foreign policy, which it calls “strategic autonomy,” as the Biden administration has been pressing it to distance itself from Moscow.

At various public forums in recent months, India’s top diplomat Subrahmanyam Jaishaknar has pushed back against Western criticism of its close ties to Russia. Jaishankar notes that Europe’s purchases of Russian fuel far exceed those of India. While that may be true, that doesn’t diminish the reality that India’s recent, rapid emergence as a major buyer of Russian oil is helping fuel Moscow’s war on Ukraine.

There are clear economic and domestic political reasons why India is buying Russian oil. But with its public defiance of Western pressure, India is also signaling that its partnership with the West will remain limited to countering China in its neighborhood.

The Top Importers of Russian Energy

These are the top importers (by value) of Russian fuel from February 24 to June 3, 2022, according to CREA:

1. China — $13.14 billion

2. Germany — $12.62 billion

3. Italy — $8.13 billion

4. The Netherlands — $8.13 billion

5. Turkey — $6.99 billion

6. Poland — $4.59 billion

7. France — $4.48 billion

8. India — $3.55 billion