Russia has redirected oil to China and India: are these two markets enough?

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Forbes on the growth in Russian oil supplies to India and China.

Speaking at the collegium of the Russian Ministry of Energy on March 28, Deputy Prime Minister Alexander Novak, who oversees the fuel and energy complex, said that Russian oil supplies to India increased by 22 times, and this estimate does not look exaggerated.

Commenting on Novak's assessment, Aleksey Gromov said:

“Such growth was indeed observed when comparing February 2022 with February 2023. Export can be approached in different ways. You can look at the cumulative total, that is, how much oil was shipped for the whole of 2022 compared to 2021. Then a sevenfold increase is close to the truth.”

“But there is one more indicator - the daily volume of deliveries,” the expert notes. — In February 2022, India took less than 100,000 barrels of Russian oil per day. And in February 2023, this figure had already reached 2.1 million barrels per day. If we compare daily supplies in February 2022 (before the start of the “special operation” * - Forbes) and February 2023 (a year later), then our supply growth will indeed be almost 22-fold.”

Is it possible to put pressure on China and India

China, in principle, demonstrates immunity to Western sanctions. If they affect its economic interests, it simply does not pay attention to them, ignores them, Gromov says.

“China now needs Russian oil, and in this regard, it is pointless to expect China to cave in under sanctions pressure,” the expert believes.

The situation with India is somewhat different from the situation with China, Gromov notes.

“When the G7 energy ministers met almost a month ago, Western countries tried to force India to join the price cap coalition,” he recalls. - But it all came down to the fact that India, in general, not objecting to this initiative, limited itself to only recommending national companies to adhere to the price ceiling. And there were no statements that India would oblige its companies to enter into agreements with Russia to meet a price ceiling. That is, in fact, it was a recommendation to companies to behave carefully so as not to fall under secondary sanctions from the United States.”

However, the expert believes that such a position is unstable, since India has large trade and economic ties with the United States. India, he points out, is very dependent on US investment and technology, so it can hardly be guaranteed that India will behave like China in terms of obtaining Russian oil in the long term.

Is supply diversification necessary?

Alexey Gromov believes that Russia needs to develop other markets, in particular the markets of Southeast Asia. According to the expert, Vietnam, the Philippines or Indonesia are ready to purchase Russian oil and can be quite accommodating when buying it.