US purchased $1.3 billion worth of Indian oil products made from Russian raw materials
Illustrative photo (Getty Images)
The United States has emerged as the largest buyer of oil products from India made from Russian oil following the imposition of price ceilings, having purchased $1.3 billion worth of oil products from December 2022 to the end of 2023, citing CNN.
Overall, Russia earned a record $37 billion from the sale of crude oil to India last year. Some of the crude oil is processed into oil products at refineries on India's western coast and then exported to the United States and other countries that have imposed sanctions on Russian oil.
According to the Center for Energy and Clean Air Research (CREA), in 2023, countries also sanctioning Russia imported oil products made from Russian oil worth $9.1 billion, which is 44% more than the previous year.
Products processed outside Russia are not subject to sanctions, critics call this oversight a "refinery loophole."
Shadow fleet
While sales of Russian oil to India are not subject to sanctions and are entirely legal, an analysis of delivery routes suggests that the so-called "shadow fleet" of tankers may be involved in this massive volume of shipments, specifically created by Moscow to attempt to conceal with whom and how it is trading, thus maximizing the Kremlin's profit.
Some oil trade between Russia and India is open and direct. Windward, a maritime artificial intelligence company, analyzed global cargo shipments for CNN and identified 588 direct voyages of oil tankers from Russia to India last year.
But some shipments between the two countries are more complicated, such as those passing through Greece. Polar Star Global studied the same route and found over 200 voyages last year of vessels from Russia engaging in ship-to-ship transfers in the Laconian Gulf onto another vessel bound for India.
The shadow fleet has allowed Russia to create a parallel shipping structure capable of withstanding shifting tactics and the focus of Western sanctions, with hundreds of opaque tanker vessels using complex routes. According to Windward's estimates, this fleet grew to 1,800 vessels last year.
Kremlin's revenues
Moscow has found a way to enrich itself through this processing and export process. One of the Indian refineries and ports receiving Russian oil is located in Vadinar and is operated by Nayara Energy, 49.1% owned by the Russian state oil giant Rosneft. According to CREA estimates, in 2023, the United States imported oil products processed in Vadinar worth $63 million, with about half of the oil used at the refinery being Russian. All of this is entirely transparent.
The report states that exports from Vadinar "lead to significant tax revenues for the Kremlin in the form of taxing the exported Russian crude oil" as well as through profits gained by Rosneft from processing and resale to Western adversaries of Moscow.
The ultimate result of India's oil purchases has been to alleviate pressure on Russian President Vladimir Putin due to oil sanctions. Russia's budget revenues reached a record $320 billion in 2023 and are set to grow even further. According to some analysts, about a third of the money was spent on the war in Ukraine last year, and an even larger portion will be spent on financing the war in 2024.
As a reminder, according to CREA data, during the first 12 months of the ban on Russian oil starting from December 2022, the UK received oil products from Russian oil worth around £570 million.
