May 31, 2023
How China and India helped Russia circumvent sanctions by buying cheap global oil

How China and India helped Russia circumvent sanctions by buying cheap global oil

The Russia Found new clients in Asia for strong oil and gas industry. Thanks to them, she was able to mitigate the effects of severe economic sanctions imposed on Russian products by Western Europe and the Gulf states. United State.

after the invasion Ukrainea Russia It overtook Saudi Arabia to become the main supplier of oil to China.

The Russia He would offer China discounts on oil and gas prices, which Russia A huge market yet to be untapped and able to offset losses caused by halting sales after economic sanctions, at least in part.

The Russia They also turned to India: before the conquest of UkraineOnly 1% of its oil exports were destined for the country. In May 2022, it was equivalent to 18%.

China, Russia India, along with Brazil and South Africa, makes up the BRICS geopolitical bloc. Despite decades of disagreements, the recent convergence between RussiaChina and India not only bring financial benefits to everyone, but also strengthen their international positions in the conflict with the hostile bloc, chiefly United State.

On June 19, in a virtual speech during the opening of the BRICS Business Forum, President RussiaVladimir Putin made it clear that sending its products to other BRICS members, especially India and China, is the company’s strategy. Russia to circumvent penalties.

While selling oil products to the Chinese and Indians, Putin mentioned the possibility of increasing the presence of Chinese cars in the country and opening Indian supermarket chain stores.

“Russian oil shipments to China and India are increasing. Agricultural cooperation is developing dynamically,” said Putin, who is primarily responsible for fertilizer shipments to BRICS countries.

According to Putin, the Russians, along with other members of the bloc, have made progress to reduce their financial dependence on the dollar and the euro in international transactions.

out to RussiaThree of the four BRICS members abstained from supporting the condemnation of the invasion of Iraq Ukraine Proposed by the United Nations (UN).

The exception was Brazil, which supported the measure proposed by the Americans. However, the Brazilian government made it clear that it was against the sanctions it imposed United State and Western Europe to the Russian economy.

Russian oil drilling platform – Photo: Reuters

The gains are clear for Putin. There has been a significant decline in revenues from oil and gas exports, but profits from the energy sector are still sufficient to finance, among other things, the war on Ukraine.

According to data from the General Administration of Customs of China, Russian oil imports – including supplies from the East Siberia-Pacific pipeline – reached 8.42 million tons last month.

This is a 55% increase from 2021, hitting record levels in May.

Chinese state-owned companies such as Sinopec and Zhenhua Oil have boosted their demand for oil in recent months.

Companies received big discounts from Russiaas buyers in Europe and United State He began to avoid Russian oil and gas after the invasion.

Thus, Saudi Arabia ranked second among the countries that supply China with oil, with 7.82 million tons.

But Russia It’s not the only sanctioned country from which China is buying oil: It took 260,000 tons of oil from Iran last month, its third such purchase since December.

According to a report by the Center for Research on Energy and Clean Air (Crea), Russia It witnessed a continuous decline in its sales of petroleum products since the sanctions began.

The report cautions, however, that Russia Loopholes were found in the laws to continue exporting.

The first is the export of crude oil to countries such as India, where this product is refined and then shipped to European countries.

“The report indicates that more and more Russian oil is being exported to India for refining and that a lot of this refined oil is making its way to European markets,” said BBC business correspondent Theo Leggett.

“when Russia In search of new markets for its products, Russian oil moves from pipelines to ships, most of which are owned by European companies. So that the pressure on Russia Effective, such issues must be addressed.”

The European Union (a group of 27 European countries) remains the main buyer of gas and oil in Russia.

Estimated $59 billion out of $97 billion (or R$307 billion out of R$505 billion) Russia in energy exports during the first 100 days of the war in Ukraine It came from the block.

For the time being at least, it has proven impossible for the EU to come to an agreement completely banning the purchase of oil and gas from Russia. But some plans have advanced.

The bloc plans to impose a ban on Russian oil imports arriving by sea before the end of the year, which would reduce the amount imported by more than 60%.

Moreover, in March, the European community committed to reducing Russian gas imports by at least two-thirds over a one-year period.

In turn, the United State A comprehensive ban on purchases of oil, gas and coal from RussiaThe UK is expected to do the same before the end of 2022.

“With fuel prices on the rise, it’s not just drivers who are queuing when they see the cuts,” says Darshini David, the BBC’s global business correspondent.

David explains that India and China have been able to take advantage of the current situation in RussiaBut he warns that with European sanctions taking effect and the move to other suppliers, the good moment for Russian exports may be short-lived.

Oil revenue Russia It is already starting to decline, and this will only increase as other countries seek alternative sources of energy.”