Virendra Pandit
New Delhi: How do times change?
Five centuries ago, post-Crusades Europe depended on India and other Asian countries for the supply of spices and condiments to preserve the meat of cattle for extreme winters—the chief reason why the Europeans gradually colonized South and Southeast Asia for an unhindered supply of those natural products.
Today, Europe, reeling under energy shortages, depends on India for its oil needs. No, India doesn’t produce crude itself—in fact, it imports nearly three-fourths of its own requirements—but has become the key channel to divert Russian petroleum products to Europe.
It’s like Pakistanis buying Indian products in Dubai as Islamabad doesn’t trade with India!
In other words, while the West sanctioned Russia after its invasion of Ukraine in February 2022, it could not stop Russian oil from flowing into the Continent through the back door. After all, before the war, Europe imported nearly half of its energy needs from Russia.
According to media reports, India has now become Europe’s top fuel supplier. The energy-hungry Continent’s reliance on Indian oil products has grown since the European Union (EU) banned the import of Russian oil products like diesel and fuel oil to curb Moscow’s revenues from energy exports. The measure followed an earlier embargo on Russian seaborne crude in which the EU, the Group of Seven (G-7), and Australia set a crude price cap of USD 60 per barrel from December 5, 2022, when the embargo became effective. The EU extended the prohibition to refined fuels in February 2023.
But the EU is using a loophole in this ban to keep its kitchen, cars, and businesses running: the ban bars only EU vessels from carrying Russian-origin petroleum products. The provision also applies to European companies providing technical, brokering, or financial assistance like insurance to cargo carrying Russian refined products.
But the EU has not banned importing Russian products through back doors like India!
Because of this, Europe’s refined fuel imports from India are set to surge over 360,000 barrels a day in April, edging just ahead of those of Saudi Arabia, the media reported.
The EU’s “rules” do not prevent countries like India from buying discounted Russian crude cheaper, turning it into fuels like diesel, and then shipping it back to Europe for a profit. So, despite the official ban, the EU continues to import Russian oil through the back door, the war in Ukraine goes on unabated, and India has become an energy provider to Europe.
New Delhi is well on the road to becoming Europe’s largest refined fuel supplier this month while simultaneously buying record amounts of Russian crude. That is how Russian oil is finding its way back into Europe despite all the sanctioning and India is ramping up fuel exports to the West.
The EU’s heavy dependence on Russian energy has forced it to find this ‘alternate’ route which, ironically, boosts Russia’s exports, at a higher price. Also, it means Europe’s own oil refiners cannot access cheap Russian crude and so cannot compete with India.
As for India, its import of Russian crude oil is likely to surpass 2 million barrels a day in April 2023, representing nearly 44 percent of its overall oil imports.
Over half of Russia’s seaborne oil shipments were going to Europe and the G-7 countries until the EU started cutting purchases in response to Moscow’s invasion of Ukraine in February 2022.