Central Idea

The article discusses India’s increased imports of Russian oil and the potential circumvention of sanctions imposed on Russian oil products.

Why in news?

An EU parliamentarian accused India of profiting from cheaply bought Russian oil and indirectly supporting the Russian economy.
India justified its purchase by emphasizing its energy demands and the challenges of higher prices due to its reliance on energy imports and significant poverty levels.

After Russia’s invasion of Ukraine, Western countries and Europe aimed to reduce their dependency on Russian energy imports to weaken the Russian economy.
Measures were taken, such as Germany suspending the launch of the Nord Stream natural gas pipeline and Canada and the US banning the import of Russian crude oil.
Stricter sanctions were imposed on Russia, including a “price cap” from trading Russian oil above $60 per barrel.
The price cap aimed to cripple Moscow’s economy and limit its ability to fund the war in Ukraine.
However, Russia increased its oil exports to India and China as a response.

India, exempt from the sanctions on Russian oil, has seen a significant increase in fuel imports from Russia, which is then refined and supplied to Europe and the US.
The refined oil from Russian crude, once processed in India, is not considered of Russian origin.
India’s oil imports have helped it meet its own energy demands and also assist Western nations facing energy crises due to the Russia-Ukraine conflict.
India has become a net exporter of refined petroleum products, supplying the West to alleviate current energy shortages.

Indian refiners have ramped up exports of refined petroleum products, including diesel and vacuum gas oil (VGO), to Europe and the US.
VGO is a feedstock in the refining process that can be further processed to produce gasoline, diesel, and other fuel products.
Diesel exports to Europe from India have increased by 12-16% in the last fiscal year.
The US has become a major recipient of Indian VGO shipments, receiving 11,000-12,000 barrels per day (bpd) or 65-81% of India’s VGO exports.
These exports from India have helped ease the energy tightness and supply constraints in Western markets.