Roving Periscope: Have China, India really ‘financed’ Russia’s Ukraine war?

Virendra Pandit

New Delhi: The West and its allies have unofficially accused China and India of indirectly financing the ongoing Russian invasion of Ukraine as the two Asian energy-hungry countries bought the maximum discounted crude oil from Russia since the war began in February 2022, defying sanctions against the aggressor.

India has vehemently denied these claims and exposed Europe’s hypocrisy as most of its countries, as also Turkey, continued to buy Russian oil and gas until December 2022, and indirectly as refined oil via India thereafter.

In a fresh report, the International Energy Agency (IEA) said that India and China, the world’s top oil users, continued to lap up heavily discounted Russian crude oil, buying as much as 80 percent of the oil that Moscow exported in May 2023, the media reported on Friday.

“Heavily discounted Russian crude oil has found new buyers primarily in Asia. India has increased purchases from almost nothing to close to 2 million barrels per day, while China has raised liftings by 500,000 barrels per day to 2.2 million barrels per day,” the Paris-based body said in its latest Oil Market Report.

Russia-origin seaborne crude exports averaged 3.87 million barrels per day in May, the highest since Russia invaded Ukraine in February 2022.

“In May 2023, India and China accounted for almost 80 percent of Russian crude oil exports…In turn, Russia made up 45 percent and 20 percent of crude imports in India and China, respectively.

With Russia’s formerly main crude export markets in Europe banning import and G-7 imposing shipping restrictions, more than 90 percent of Russian seaborne crude is now headed to Asia, up from pre-war levels of 34 percent.

India’s imports of Russian oil in May were 14 percent higher than in April 2023.

After the Ukraine invasion, as the West imposed and gradually tightened sanctions, Russia started giving deep discounts on crude, which became an incentive for China and India. Russia’s main crude export grade Urals discount to Dated Brent averaged USD 26 per barrel in the first three weeks of May, vis-à-vis USD 3.70 a barrel in January 2022.

The IEA report projected Indian GDP to grow by 4.8 percent in 2023, rising to 6.3 percent in 2024 before recovering to an even stronger 7 percent in 2025-28.

“Growth will be buttressed by favorable demographics and an expanding middle class.”

India, the fasted growing economy in the world, which surpassed China to become the most populous country in 2023, would overtake its challenger in terms of global year-on-year oil demand growth in 2027.

“Although its rate of expansion has been slowing for decades, population growth will likely not peak until 2065,” IEA said.

“Further propelled by trends such as urbanization, industrialization, and the emergence of a wealthier middle-class keen for mobility and tourism, Indian oil demand will grow by more than 1 million barrels per day between 2022 and 2028.

Diesel, the main fuel by far, will see its share of the product mix climb from 32 percent to 35 percent over the forecast period.