India is playing an increasingly important role in global oil markets, buying more and more cheap Russian oil and refining it into fuel for Europe and the US.
“US treasury officials have two main goals: keep the market well supplied, and deprive Russia of oil revenue,” said Ben Cahill, a senior fellow with the Center for Strategic and International Studies, a Washington think tank. “They are aware that Indian and Chinese refiners can earn bigger margins by buying discounted Russian crude and exporting products at market prices. They’re fine with that.
The Asian nation’s importance is expected to expand after fresh European Union sanctions on Russian petroleum exports take effect Sunday. The ban will remove a huge volume of diesel from the market and see more consumers, especially in Europe, tap Asia to fill the supply gap. Under EU guidelines, India is likely operating within the rules. When Russian crude is processed into fuels in a country outside of the bloc such as India, the refined products can be delivered into the EU because they’re not deemed to be of Russian origin.
A key facet of the mechanism to crimp revenues to the Kremlin and keep some oil on the market has been a price cap on Russian crude, a measure that was spearheaded by the US. India hasn’t publicly said if the nation does or doesn’t adhere to the limit, but sanctions have driven oil from the OPEC+ producer below the $60 a barrel cap.
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