The West pretends sanctions against Russian oil are working well

India and China start conquering European markets on Russia's shoulders

Western sanctions imposed on Russian oil and petroleum products are not working, and the EU, as well as the UK, are well aware of this. India and China take advantage of the situation.

Brussels and London pretend their sanctions work

The embargo on the supplies of Russian oil and petroleum products to the European market will come into force on February 5. The embargo is to be imposed on the products the price on which exceeds EU's price cap.

Meanwhile, European traders have been stocking up on diesel fuel to survive daily losses of about 600,000 barrels of diesel fuel.

There are no additional capacities for the production of diesel fuel in the world. A solution was found anyway: it was decided that China and India would process Russian oil and supply it to the EU as diesel fuel, Bloomberg said.

India has become one of the largest buyers of Russian oil during the period when Western states started imposing stringent sanctions against Russia. According to Reuters, at least four Chinese supertankers deliver Russian Urals oil to China after the EU and G7 implemented a price cap on Urals oil a month ago.

This form of trade — through third countries — does not violate EU rules, but highlights the inefficiency that is inherent in anti-Russian sanctions. It is worthy of note that 49 percent of Nayara Energy, India's second largest refinery, belongs to Russia's oil giant Rosneft.

Both the British and the Europeans are well aware that they still buy Russian oil, albeit processed. However, they pretend that their sanctions against the Russian oil industry are working.

Meanwhile, Russia's oil and gas revenues grew by 28 percent last year.

India threatens Russia with sanctions to appease the West

Other participants in the oil market also play the game of pretence.

India said that it would consider reducing supplies from Russia as soon as the price on the Russian oil gets to the cap level of $60 per barrel.

The Russian oil is currently trading at about $40 per barrel in the Baltic port of Primorsk. Brent costs about $80 per barrel. That is, the Russian oil is almost twice as cheap as the benchmark Brent brand. Moreover, it is $20 below the cap. Russia is thus forced to trade at a discount as the cost of insurance and sea freight has increased.

India is unlikely to join the sanctions against such a background. Russian oil has become a stabilising factor in the Asian market, which used to be very expensive. Indian and Chinese goods produced on cheaper energy (instead of the EU) have been getting more competitive. In a nutshell, it is not only oil companies of these countries, but economy in general that profits from the situation.

New Delhi simply tries to be on the safe side to avoid criticism in the West.

Moscow turns a blind eye to trade with unfriendly countries

Strange as it may seem, Russia is also playing the game of pretence. Russia's Ministry of Energy confirmed that Russian companies would not work with traders who complied with restrictions on oil prices in any form. However, a decree that was published (almost a month later) after the imposition of the sanctions prohibited oil supplies only if concluded contracts referred to the established price cap.

Oil deliveries are permitted in all other cases. Such vague language allows Russian exporters to say that they are complying with Putin's decree.

As a matter of fact, the Western price cap invites Russian oil even into the dollar zone, because Brent is more expensive, and entrepreneurs will find loopholes here over time. They may sell Russian oil at a price above the cap, but write it down in contracts as broken down by services. Insurers and carriers that will not adhere to Western sanctions will emerge over time as well.

India and China will conquer European market on Russian shoulders

Business will not work in the red. Political will may change — this is evidenced by the case of Venezuelan oil, which the United States returned to the market by lifting sanctions from Venezuelan oil supplies.

When the Russian Federation wins the proxy war with NATO, the political will is going to change too. China and India will literally crawl into the EU market on Russia's "energy shoulders." China and India are also going to be among the winners.

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Author`s name Lyuba Lulko
Editor Dmitry Sudakov