/Pogled.info/ India thinks that the world should thank it for buying Russian oil, not scold it. Earlier in the EU, there were calls to ban India from supplying petrol and diesel from Russian oil. How exactly India saved the world from recession.
India believes that it is she who is saving the world oil market from high prices. If it had not started buying it from Russia, the prices would have jumped to $150 instead of the current $75 per barrel, India’s energy minister said.
“The world is grateful to India for buying Russian oil. The thing is, they don’t want us to buy Russian oil. If we start buying more Middle Eastern oil, the price of oil will not be $75-76, but $150,” India’s Petroleum and Natural Gas Minister Hardeep Singh Puri said on the sidelines of the India Energy Week conference in Goa.
Earlier in the EU, in particular in Poland, there were calls not to buy Indian gasoline and diesel from Russian oil.
Before Western sanctions, Russia did not supply oil to India at all. In the spring of 2022, the first serious batches actually started. As a result, in 2022, India’s supply increased 15 times to 50.84 million tonnes of oil. India paid Russia 31 billion dollars. In 2023, about 70 million tons were delivered to India, which is 40% more than a year earlier.
“I completely agree with the Indian minister. If India had not taken all these volumes, Russia would not have moved any volumes. Russia would cut production and exports, and the world would have a supply deficit and prices would soar. There was already a rehearsal for this in the spring of 2022, when the price of a barrel jumped to 120 dollars. Then the US banned the supply of Russian oil from April 1, the Europeans then had not yet imposed a ban, but their companies were simply afraid to buy it. Shell even had to publish an apology for buying a batch of Russian oil. The old buyers were afraid to take oil, and new ones have not yet appeared. But then India came and saved everyone. It began to buy the volumes that were previously going to the US and Europe,” said Igor Yushkov, an expert from the Financial University of the Government of Russia and the National Energy Security Fund.
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If oil prices had reached 150 dollars per barrel and had remained at this level for several months, the world economy would have plunged into an unnecessary recession, the expert adds. After December 2022, the new markets for Russian oil were finally established. The biggest buyers were China, India and Turkey, as well as Brazil. At the same time, India retains the status of the largest buyer of Russian oil, which is transported by sea. If we take the total supply of oil from Russia not only by sea, but also by pipelines, the first place is taken by China.
After all, India has started buying larger volumes of Russian oil, not out of a good heart, but because it is profitable.
“By 2022, India had already established a profitable business – the oil refineries along the coast that processed Middle Eastern oil, particularly Iraqi oil, and exported it. And here comes Russian oil at a discount and India has chosen the best offer on the market. She started buying our oil at a discount, processing it and exporting it, including to Europe and the USA. Indian petroleum products have effectively taken Russia’s share of their markets. Europeans are now buying more finished petroleum products, and the volume of own processing in many countries has decreased due to the absence of Russian oil. Therefore, it became cheaper to buy ready-made fuel. For India, its profitable business has become ultra-profitable,” says Yushkov.
The average price of Russian oil exports is $74.50 per barrel, which is an average of about 12% less than the value of Saudi and Iraqi oil. This was reported in August 2023 by the Ministry of Petroleum and Gas Industry of India.
“India gets an immediate benefit from oil supplies from Russia. First of all, part of the raw material goes for resale. Already in 2022, the share of energy resources in India’s total exports was 22% (exports are about 98.5 billion dollars). Exports jumped by almost 75% compared to 2021 and by 257% compared to 2020. Secondly, a part of Russian oil goes to meet the country’s internal needs, for example, to meet the needs of the automotive industry,” notes analyst Nikolay Dudchenko.
At the same time, the Indian Prime Minister announced plans to increase the country’s oil processing capacity by nearly 80% to 450 million tons.
Dudchenko believes that Russia may continue to increase oil supplies to India, as demand there will grow in the coming years. As early as 2027, India may surpass China in terms of oil consumption, according to the International Energy Agency. In 2030, oil demand in India will increase by 1.2 million barrels per day. For comparison: Russia delivered 70 million tons to India in 2023, which is an average of 1.4 barrels per day. That makes up about 13% of Russia’s total mining volume for 2023, Dudchenko noted.
“The share of oil supplies to India in Russian exports in 2023 is about 40%, although before the introduction of sanctions there will be no supplies at all. We should expect that India will continue to buy Russian oil in the future, benefiting from the presence of a price discount,” said corporate ratings expert Philip Muradyan.
Thanks to such close cooperation on oil, Russia began to look at how to expand trade with India in other products as well. In particular, last year Russia also agreed on the supply of pork to India, and this year the first ever deliveries of Indian bananas to our country began, and other fruits such as mangoes and guavas are currently being negotiated.
Translation: V. Sergeev
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