What Indian Purchase Of Russian Oil Means?
Amid the US-led Western sanctions against Moscow, the deliveries of Russian oil to China and India in May reached record-high volumes. Overall, seeing India purchase the Russian oil, other countries of the Asia-Pacific region (APAC) too began to purchase more Russian oil than all of Europe. Russia is selling raw materials at a 30% discount and is ready to increase supplies, while APAC countries so far are only ready to buy cheap energy products while increased investments or the participation in Russian projects are mere talk.
Director of the National Energy Security Fund Konstantin Simonov says that Russia doesn’t yet have other options to maintain the high level of oil exports besides the supplies to the Asia-Pacific region. In order to achieve full-fledged cooperation and investments, it is necessary for a mutual seller-buyer dependence to emerge, the one Russia had with Europe when it was taking up to 40% of its energy market. In order to attain this, long-term contracts are needed. The expert noted that under the conditions of Europe and the US destroying the global oil market, such contracts would profit both suppliers and buyers.
India will surely go for a long term contract with Russia for oil to ensure its security needs. Thereafter others too will follow the lead.
According to Associate Professor at the Russian Government’s Financial University Valery Andrianov, the competition between Asian-Pacific countries also plays into Russia’s hands. There are several major players on this market and the major buyers of Russian oil are currently China and India who are competing in many spheres. The professor noted that while China has embarked on a post-pandemic recovery, the Indian economy is booming as was projected, so this competition will only expand.
According to Simonov, due to Europe’s destructive actions, a global redistribution of the market is underway, with the breakup of all the usual ties and logistics flows which is particularly apparent on the LNG market, as well as with oil and coal. In this situation, Russia stands a good chance of concluding mutually beneficial long-term contracts with the Asian-Pacific partners and create infrastructure to increase deliveries in the eastward direction.
Andrianov concurs, contending that the sanctions war unleashed by the West leads to the destruction and defragmentation of global energy markets. Nowadays, new international energy alliances will emerge based on increased investments on the part of consumer states into the oil and gas complexes of producing countries. Asian companies will aspire to cement partnerships with Russia in the oil and gas sphere regardless of current global prices for oil and gas, the expert explained.
