The EU decides on a package of sanctions at the beginning of June and no longer wants to import oil from Russia. The problem: There are loopholes that thwart this plan. And that’s not because of Hungary, who got an exemption.
An embargo works best when it says “all against one”. This is difficult to implement when national interests take precedence – as the oil embargo against Russia in India shows.
Private Indian companies are currently buying oil on very favorable terms, as Russia needs the proceeds to finance the war of aggression against Ukraine. These companies in India process it further and then sell it more expensively to third countries – some of which are also in Europe.
The Finnish research institution “Centre for Research on Energy and Clean Air” (CREA) draws attention to this. According to the analysis, India recently bought around 18 percent of Russia’s total crude oil exports.
For India, that makes perfect sense. The country is the third largest consumer of oil after the US and China. While Western companies avoid Russian oil, Indians are buying cheap with discounts of up to 30 percent. Then it is worthwhile to bear the high transport costs, as a tanker journey takes about 40 days.
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While the government in New Delhi justifies the need for these purchases with the country’s security of supply, the problem is multifaceted. Because the discounts seem to be so lucrative that industrial groups like Reliance or Nayara Energy ship about half of their imports abroad. In other words, it is resold as Indian petrol or diesel. According to the researchers in Helsinki, there have already been deliveries to France, Great Britain and Italy – and also to the USA.
Proving where the oil came from is difficult. But the Finnish authors see a leverage for the West – the tankers, two-thirds registered in Europe or the US, that transport the oil. The EU could take advantage of this situation because it has issued an import ban on Russian oil by sea. But there is another problem: EU sanctions have to be unanimous, and since Greek shipowners operate the world’s largest tanker fleet, the government in Athens has vetoed it. Apparently they make too much money from the transport – also from Russian oil.
But India is not the only customer. Putin wants to expand economic relations with large emerging countries. “The volume of deliveries of Russian oil to China and India is increasing noticeably,” said the Kremlin chief a few days ago in his video greeting at the Brics Economic Forum.
The danger for Russia: Switching to non-Western markets is risky because dependence on countries like China is growing. According to CREA analysts, China has become the world’s largest importer of fossil fuels from Russia, overtaking Germany. And while China also maintains political relations with Russia, other important emerging countries such as India buy oil cheaply but refuse to close ranks with Putin and describe themselves as geopolitically neutral.
But one thing is certain: the loophole must be plugged if the EU sanctions are not to fizzle out ineffectively. CREA researchers determined that in the first 100 days of the war (February 24 to June 3) Russia made 93 billion euros from exporting fossil fuels.
