India Pursues New Import Contracts with Russian Oil Companies... Controversy Over Loopholes in Sanctions Against Russia

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] India is reportedly planning to further expand its imports of Russian oil despite criticism from the United States and other Western countries. This move is interpreted as a measure to cover the surge in oil prices following the Ukraine crisis. Criticism is expected to grow that sanctions are not being effectively enforced as India and China continue to maintain their imports despite the European Union (EU) strengthening sanctions against Russia.

According to Bloomberg on the 6th (local time), Indian state-owned oil companies are finalizing a new crude oil supply contract with Rosneft, Russia's largest state-owned oil company, for a six-month term. The specific volume and price are still under negotiation, and the Indian state-owned companies involved in the imports are reported to be Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation.

India, the world's third-largest crude oil importer, depends on imports for 80% of its total demand. Especially after the Ukraine war caused oil prices to surge, India has actively purchased Russian oil, which is being sold at relatively low prices. According to Bloomberg, India's imports of Russian crude oil averaged 740,000 barrels per day last month, a significant increase compared to 284,000 barrels in April and 34,000 barrels in the same month last year.

Since the start of the Ukraine invasion war at the end of February, India has imported over 40 million barrels of crude oil from Russia as of early last month. This compares to 16 million barrels of Russian crude oil imported by India throughout the entire previous year. Normally, India sourced only 2-3% of its crude oil imports from Russia. Notably, Indian refiners are known to "launder" the origin of the imported Russian crude oil and re-export it worldwide, generating substantial profits.

Despite the West strengthening sanctions against Russia, including the EU's sixth round of sanctions that bans maritime imports of Russian oil, and ongoing criticism from various countries, the Indian government remains unmoved. Indian Foreign Minister S. Jaishankar stated at a press conference on the 3rd, "Traders simply buy the most suitable crude oil in the market," adding, "We will not assign a political message to this."

The United States is also unable to antagonize India, a key member of the Quad, a military consultation group aimed at countering China. Although U.S. President Joe Biden expressed concerns during a virtual summit with Indian Prime Minister Narendra Modi in April that increasing imports of Russian energy and other goods is not in India's interest, no concrete measures have been taken against India.

This content was produced with the assistance of AI translation services.