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Russia’s Financial Windfall: A $37 Billion Oil Bonanza from India

Russia has hit a record high in federal revenue, significantly bolstered by India’s substantial purchases of Russian crude oil. Last year, Russia’s coffers swelled to an unprecedented $320 billion, thanks in large part to India’s strategic move to capitalize on discounted Russian oil amidst global sanctions.

According to a revealing report from the Centre for Research on Energy and Clean Air, shared with CNN, India’s procurement of Russian oil skyrocketed to $37 billion in 2023. This figure represents a thirteenfold increase from its purchases before the conflict in Ukraine, illustrating a significant shift in global oil dynamics.

The backdrop to this surge is Moscow’s invasion of Ukraine, which led to stringent trade restrictions from the West. In response, Russia offered substantial discounts on its crude to allies like India and China, who eagerly increased their intake, effectively offsetting the loss of Western customers. Russia managed to reroute nearly all of its oil shipments to these two nations, with India alone accounting for 35% of its oil sales in 2023, as per S&P Global’s analysis.

India’s role as one of the world’s largest oil refiners has further complicated the geopolitical landscape. The country has processed Russian crude and then supplied it to Western nations, including the US, despite their ban on Russian oil imports implemented in late 2022. The Centre for Research on Energy and Clean Air’s analysis indicates that India likely exported about $1.3 billion worth of oil products of Russian origin to the US between December 2022 and the end of 2023.

Moreover, countries enforcing sanctions against Russia indirectly purchased $9.1 billion of Russian oil products through intermediaries, marking a 44% increase from the previous year. This development highlights the complex interplay of global sanctions, trade, and energy needs.

However, India now finds itself under increasing pressure from the West to align with trade restrictions against Russia. This pressure is reflected in a recent slump in Indian exports of Russian oil to their lowest level in a year as of January. Additionally, there have been reports of India turning away tankers loaded with Russian crude, signaling potential shifts in its oil trade strategy amidst the geopolitical tension.

This saga of Russia’s financial gain, driven by India’s oil purchases amidst a global sanctions regime, underscores the intricate connections and dependencies in the international oil market. As nations navigate these complex waters, the long-term implications for global energy security, economic sanctions, and geopolitical alliances remain to be seen.