U.S. President Donald Trump is pushing China and India to stop buying oil from Russia and helping fund the Kremlin’s war against Ukraine.
Trump is raising the issue as he seeks to press Russian President Vladimir Putin to agree to a ceasefire.
Economical Russian oil is advantageous for refiners in certain countries by satisfying their energy demands, without any signs of halting the practice.
Three countries are big buyers of Russian oil
China, India, and Turkey have become the primary destinations for oil previously routed to the European Union. When the EU decided to cease most Russian seaborne oil imports starting January 2023, it resulted in a significant redirection of crude flows from Europe to Asia.
Following this shift, China emerged as the leading buyer of Russian energy following the EU boycott, purchasing around $219.5 billion worth of oil, gas, and coal. India followed with $133.4 billion, and Turkey with $90.3 billion in purchases. Prior to the invasion, Indian imports of Russian oil were comparatively minimal.
Hungary continues to import some Russian oil via a pipeline, even though it is an EU nation. However, President Viktor Orban has voiced opposition to sanctions against Russia.
The lure of cheaper oil
The main attraction of Russian oil is its low cost. Since it is priced below the international Brent benchmark, refineries can increase their profit margins by converting crude into products like diesel fuel.
Russia’s oil earnings are substantial despite sanctions
According to the Kyiv School of Economics, Russia made $12.6 billion from oil sales in June. Despite efforts by the Group of Seven industrialized nations to limit Russian revenue by implementing an oil price cap, Russia remains profitable. The cap is meant to be enforced by barring shipping and insurance companies from handling shipments priced above the cap. Nonetheless, Russia largely circumvents this by using a “shadow fleet” of old ships, insurance, and trading companies in nations not upholding the sanctions.
Russian oil exporters are predicted to take in $153 billion this year, according to the Kyiv institute. Fossil fuels are the single largest source of budget revenue. The imports support Russia’s ruble currency and help Russia to buy goods from other countries, including weapons and parts for them.
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