Russia pivots oil sales to India amid Ukraine sanctions

Oil exports to the two most populous countries on the planet, India and China, have made up 90% of all Russia's crude exports this year, Deputy PM Alexander Novak told Russian state broadcaster Rossiya-24 on Wednesday, 27 December.

Novak, whose portfolio includes control of the country's energy sector, said Moscow had successfully circumvented the effects of Western sanctions amid its invasion of Ukraine by rerouting supplies primarily to the two Asian giants.

He said that this process had already begun before its February 2022 invasion and the sanctions that soon followed, but that US and EU restrictions had served as a catalyst for it.

"As for those restrictions and embargoes on supplies to Europe and the U.S. that were introduced ... this only accelerated the process of reorienting our energy flows," Novak said.

He said that the share of Russian oil exports to EU members had fallen to around 4% or 5%. By comparison, Russian oil exports to the resource-rich US were always very limited in scope.

India by far the faster-growing market

Novak said China's share of Russian exports had grown to around 45-50%.

But the deputy prime minsiter also said that, of the two markets, it was India where Russian sales were growing most rapidly.

"Earlier, there bascially were no supplies to India; in two years, the total share of supplies to India has come to 40%," Novak said.

India has even been able to purchase exported Russian crude oil, sometimes at a discount, refine it, and then sell it to Europe. This is partly possible because refineries often use crude from various sources, making it difficult or impossible to define where the end product originally hailed from.

The EU's top foreign policy official, Josep Borrell, told Reuters earlier this year that the bloc was both aware of the reported issue and looking for ways to halt or limit the practice.

"That India buys Russian oil, it's normal. And if, thanks to our limitations on the price of oil, India can buy this oil much cheaper, well the less money Russia gets, the better," Borrell said this March. "But if they use that in order to be a center where Russian oil is being refined and by-products are being sold to us ... we have to act."

Similar revenues to 2021, before invasion, Novak says

Deputy Prime Minister Novak also told Rossiya-24 on Wednesday that Russia was sticking to its supply cut pledges as a member of the OPEC+ group of oil-producing countries. He said he anticipated an oil price similar to current levels in 2024, around $80-85 (roughly €72-77 at the current exchange rate) per barrel.

He predicted that Russian oil and gas export revenues would total almost 9 trillion rubles (roughly $98 billion) for the year, a level similar to 2021, the last year before the invasion of Ukraine and subsequent sanctions.

The oil and gas industry accounts for around 27% of Russia's GDP, according to Novak, and around 57% of its export revenues. He said Moscow remained open to other buyers.

"There are a lot of people who want to buy Russian oil. These are Latin American countries, African countries, and other countries of the Asia-Pacific region," he said.