The period of end-of-year festivities does not seem to be on the agenda between Westerners and Russia. Last Monday, the members of the European Union and the G7 decided on a new sanction against the Kremlin: no more ships carrying Russian crude oil will be able to unload their cargo on the old continent. No problem for the Kremlin, its allies are ready to strengthen their imports.
Pnine months after the “special military operation” launched by the President of Russia on Ukraine, Western countries are not losing hope in their fight to curb the Russian war effort. It is therefore in this perspective , as well as to force Russia to sell its crude oil cheap and to bring down its budgetary revenues, that the Europeans have placed an embargo on Russian oil as well as a cap on the price of a barrel at 60 dollars. Above all, this ceiling price ensures a certain stability in the market and does not destabilize world production.
In response, smart guys jumped at the chance: China, India, and even Turkey began to gobble up, benefiting from a rebate, all this crude oil not sold to Europeans. Chinese imports of Russian oil increased by 28% last May and are likely to continue to grow. Similarly, India bought 60 million barrels from Russia in 2022, up from 12 million in 2021, and Russian oil now accounts for 22% of the country’s oil imports. “Shadow tankers” would be used by the Russians to circumvent Western rules and deliver to China and India without passing through the ports or territorial waters of European countries.
While waiting for other sanctions which will arrive in February 2023 on refined products, the Kremlin is still finding alternative solutions. If these measures do not destabilizefinally no one, they benefit some. It is with an ogre appetite that China and India accept Russian oil at a lower cost.
Drawing by Amandine Victor for Zonebourse