India, China ‘enjoy the discount’ on Russian oil as EU tightens price cap

Steep discounts have helped New Delhi and Beijing negotiate their purchases of Russian oil products below a price cap imposed by Western nations

It’s helping to offset cost living increases in Asia’s two biggest economies – and making it easier for Moscow to keep its year-long war-effort afloat

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Fuel caps and import bans could force Russia to divert even more crude to Asia’s biggest energy buyers. Photo: Reuters

Published: 11:00am, 19 Feb 2023

Sales to India and China of discounted Russian crude will undercut the European Union’s latest efforts to limit Moscow’s oil revenues, analysts warn, as Asia’s largest economies leverage Western sanctions on Moscow’s energy sector to insulate their people from surging global inflation.

Russia’s steep discounts have helped New Delhi and Beijing negotiate their purchases below a price cap imposed by Western nations on Russian oil, helping offset cost of living increases and keeping Vladimir Putin’s war effort afloat after a year of brutal losses and inconclusive progress.

Fresh EU sanctions kicked in a fortnight ago to stop imports of refined petroleum products from Russia. That follows the 27-nation bloc halting its purchases of Russian crude since December.

At the same time, the G7 has imposed a global price cap on Russia’s oil supplies at US$60 per barrel. The EU this month set its cap at US$100 for premium oil products such as diesel and petrol, with a lower US$45 per barrel cap for discount products such as fuel oil.

Storage tanks at an oil refinery in the western Indian state of Gujarat. Indian officials have said they will not risk upsetting the economy to uphold sanctions driven by the West. Photo: Reuters

Global access to ships, marine insurers and other services based in G7 and EU jurisdictions could be affected by the price caps if Russian oil products are bought for more than the maximum price.