May 24: Nearly 90 days have passed since Russia invaded Ukraine in one of the biggest invasion since the World War II. European countries have cut Russian oil imports, a key pillar of the Russian economy, as part of sanctions against Russia.
The United States has announced that it will suspend imports of Russian oil. The G7, a group of seven industrialized nations, also announced last weekend that it would gradually reduce Russian oil imports.
But Russia still has a lot of buyers. The oil imported by other buyers is enough to keep the Russian government's revenue high and cover the necessary expenses. Before the invasion of Ukraine, Russia sold 785 million barrels of crude oil a day to Europe.
But since the invasion of Ukraine, Europe has announced a sudden reduction in its dependence on Russian oil and gas. The Ukraine crisis raised the prices of crude oil across the world. Russia, meanwhile, is benefiting from rising crude oil prices as it seeks new buyers and seeks to increase exports to the Asian markets.
Russia's oil revenues are expected to rise sharply to USD 180 billion this year, according to independent research firm Rystad Energy.
This will be 45 per cent higher than the same period last year. Looking at the trend of tanker traffic, Russia's crude oil exports have declined by a maximum of 20 per cent. A study by Spire Global for the Washington Post found that an average of 17 tankers were released from Russian ports daily when the United States imposed economic sanctions on Russia on March 8.
India and China have been buying Russian oil in defiance of sanctions imposed on Russia over the war. At one time, Russian oil accounted for less than 3 per cent of India's total consumption. Now it is constantly increasing.
In March, India bought 274,000 barrels of oil a day from Russia. In April, it rose to 627,000 barrels, according to data from international data company S&P Global.
Russia became India's fourth-largest oil supplier in April. India's oil purchase appears to have increased further in May.
China is already Russia's largest Asian buyer. China has recently increased its purchases of Russian oil. China's daily import of Russian oil is expected to reach 1.1 million barrels by the sea in May.
That's 350,000 more barrels a day than in the first quarter of this year, and 300,000 more a day in 2020.
Russian oil has become even cheaper than water for India after Russia offered oil at a much lower price than the international selling mark after the US and Europe imposed sanctions.
Brent and WTI, the international benchmarks for crude oil in the Western markets, are above USD 110 as Europe prepares to ban Russian oil imports.
Russia is now selling domestic benchmark Ural Brent crude at USD 34 less than before the invasion of Ukraine.
At a time when the economy is slowing, buying cheap Russian oil has been a boon for China. For India, this is a golden opportunity to reduce the trade deficit.
Russian oil is now much cheaper for both China and India than the oil imported from the Middle East, Africa, Europe and the United States.