Page 6 - AsianOil Week 49 2022

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Oil price cap scheme is threatened as Russia

on course to become India’s biggest supplier

PIPELINES & RUSSIA is on course to become India’s top oil their destinations the sanctions regime went into
TRANSPORT supplier in December after shipments to the effect on December 5 but any oil already at sea
country soared in November and are likely to on that day can still be accepted at its destination
India continues to take increase going forward. sanction free until January 19 to allow for transit
advantage of the hefty Notably, India has opted out of participating times.
discount that Urals in the West’s oil price cap scheme that came into Russia’s India-bound oil exports skyrocketed
trades at. force in Europe on December 5. The mechanism, to 902,000 bpd in October and hit a record high
which is designed to cut Russia off from its oil of around more than 1mn bpd in November,
revenues, is enforced by sanctioning shipping going from almost zero in January and February
that carries oil at contract prices higher than the this year.
current cap price of $60 per barrel. “This will likely result in Russia being India’s
India has chosen to recognise Russian insur- number one supplier in December,” Matt Smith,
ance for shipping, which dodges the cap mecha- lead oil analyst at Kpler, told The Independent,
nism. Moscow has already successfully replaced replacing the previous leaders, the Kingdom of
all the oil exports to Europe, which have fallen Saudi Arabia (KSA) and Iraq.
by half this year to about 2.5mn barrels per day Whether this high level of oil imports from
(bpd), with new exports to India and China. Russia is sustained after the January 19 deadline
Early this year China overtook Germany as passes remains to be seen.
Russia’s biggest single customer for oil, but now Indian Oil Minister Hardeep Puri said earlier
India looks like it will overtake China for that this week that his country was not concerned
title. about the price cap imposed by the European
Indian imports of Russia oil have exploded Union on Russian oil. He said Delhi's intends
this year from almost nothing last year and will to "continue buying crude from Moscow at the
top 1mn bpd by the end of this year, according present time."
to data retrieved from the commodities tracking India justifies its continued imports from
firm Kpler. Russia as part of a long-term strategy to diversify
Kpler reports that oil loadings hit a peak in its imports. China has also long followed a diver-
November as refiners purchased more than 1mn sifying policy of limited suppliers for 15% of its
bpd. However, that spike may only be due to the needs, although it has breached those norms this
45-day grace period on the embargo: taking into year to take advantage of the deep discounts that
account the time it takes for tankers to travel to Russia has been offering. ™

P6 www. NEWSBASE .com Week 49 13•December•2022