As the war in Ukraine continues to escalate, Russia has found a new and lucrative market for its oil exports: India. According to Russia’s Deputy Prime Minister Alexander Novak, India has become the largest buyer of Russian crude oil this year, accounting for 40% of the total exports. China is the second largest buyer, with 45-50% of the exports. Together, the two Asian giants make up 90% of Russia’s oil exports in 2023, while the share of the European Union has dropped to 4-5%.
This dramatic shift in Russia’s oil trade is the result of the Western sanctions imposed on Moscow since its invasion of Ukraine in February 2022. The sanctions have targeted Russia’s energy sector, banning the imports of Russian oil and gas, and restricting the access of Russian companies to the global financial system. The sanctions have also affected the price and demand of Russian oil, as many buyers have turned to alternative sources.
To cope with the sanctions, Russia has offered its oil to India at steep discounts, sometimes as low as $35 per barrel below the pre-war prices. India, which is the third largest oil consumer in the world, has seized this opportunity to diversify its energy supplies and reduce its import costs. India has also taken advantage of the situation to refine and re-export some of the Russian oil to Europe, despite the EU’s efforts to stop this practice.
The growing oil trade between Russia and India reflects their strategic partnership, which has been strengthened by the war in Ukraine. India has adopted a neutral stance on the conflict, refusing to condemn Russia’s aggression or support the Western sanctions. India has also hosted the G20 summit in November, where it called for dialogue and de-escalation between Russia and the West. India’s Prime Minister Narendra Modi has described the relationship with Russia as an “unbreakable friendship”.
The war in Ukraine has not only reshaped the geopolitics of Europe, but also the dynamics of the global oil market. Russia has shown its resilience and adaptability in the face of the sanctions, while India has emerged as a major player and a potential mediator. The future of the oil trade between the two countries will depend on the outcome of the war and the evolution of the sanctions. But for now, it seems that Russia and India have found a mutually beneficial arrangement in the midst of a crisis.
