Why Putin wants help from India on Oil ?

Why Putin wants help from India on Oil ?

However, any such move was a double-edged sword, especially in Europe, which relies on Russia for 25% of its oil and 40% of its natural gas. European countries that are even more heavily dependent on Russia have been especially reluctant to act. But with the war nearing the 100th day and Russia stepping offensive in the east, the EU nations have ultimately decided to ban 90% of all Russian oil imports over the next six months.

WHAT’S HAPPENING?

President Vladimir Putin may need to count even more on India and China after the European Union agreed to ban Russian oil in the bloc's toughest move against Moscow since the February 24 invasion. From the moment Russia invaded Ukraine, the West has sought to hit Moscow's lucrative energy sector to cut off funding for its war.

COST TO RUSSIA

The move could potentially cost Putin up to $10 billion a year in lost export revenue. In response to the EU's decision, Mikhail Ulyanov, Russia's permanent representative to international organizations in Vienna, took to Twitter, saying: "Russia will find other importers."

DEPENDENCE ON INDIA & CHINA

With EU's latest measure to punish Russia, President Putin will now have to rely on India and China, which are among the few countries that can process the type of crude Europe typically buys. Russia's flagship Urals crude - an oil brand that had been popular in Europe - has always had limited buyers in Asia.

The grade can't easily be refined in large quantities in countries such as Sri Lanka and Indonesia that don't have sophisticated processing and blending capabilities to handle the highly sulfuric type of oil. On the other hand, India and China have refineries that can process Urals. This means Putin would hope that both the countries would pick up the extra barrels after the EU embargo comes into force.

HOW MUCH INDIA IS IMPORTING?

India has already mopped up record amounts of Russian oil while Chinese refineries are expected to step up purchases after emerging from a months-long lockdown. India is the world's third-biggest consumer of crude and relies on imports for almost 85% of its needs.

Russia fulfils just less than one percent of this need. 

But since the war began, India has scooped up millions of barrels of Russian oil, mostly Urals crude, at steep discounts to cut its imports bill. So far, India has received 34 million barrels of discounted Russian oil. The country received more than 24 million barrels of Russian crude this month, up from 7.2 million barrels in April and about 3 million in March, and is set to receive about 28 million barrels in June.

CONCLUSION

Energy-hungry China, too, has stepped up Russian oil purchases during the invasion despite the threat of western sanctions. However, there is a limit on how much oil India and China can realistically buy.

But in the foreseeable future, Russia may continue to lure both India and China with heavy discounts to keep its oil flowing.