Major oil importers in Asia, such as China and India, have been under pressure from oil prices that have skyrocketed since Russia invaded Ukraine in late February. In addition to the attractiveness of cheaper Russian oil, both Beijing and New Delhi have close ties to Moscow. Yergin told CNBC “Street Signs Asia” on Monday: “It seems that Asia would be the default market for Russian oil barrels that would normally go to Europe.” The West has punished Moscow for invading financially with the US banning Russian crude, the UK planning to do the same and the European Union weighing in on similar measures. Yergin added, “There are a lot of self-sanctions, people who just do not receive oil, banks do not provide credit letters, shippers do not show up and, indeed, people in some ports do not receive Russian oil.” I would say five weeks ago that Russia is an energy superpower … I think it will still be an important player. But it will be less energetic compared to where it was before. That leaves Russia with a surplus of crude that is difficult to sell and the situation is likely to worsen, analysts said. Russia, part of the OPEC + alliance, is the world’s largest exporter of oil to world markets and the second largest exporter of crude oil after Saudi Arabia, according to the International Energy Agency. “I would have said five weeks ago that Russia is an energy superpower … I think it will still be an important player. But it will be a reduced energy power compared to where it was before,” Yergin said. Earlier this month, the IEA said Russian crude was being sold at record discounts. Some trading companies have recently offered discounts of $ 30 and $ 25 per barrel for the Urals mix, according to analysts. In contrast, prices for energy exports from other countries have skyrocketed to levels not seen for more than a decade. Oil prices are about 80% higher than a year ago and have been volatile since the start of the war.
India’s appetite for Russian oil
India has traditionally sourced its crude from Iraq, Saudi Arabia, the United Arab Emirates and Nigeria – but all are dictating higher prices right now as oil prices soar. Industry observers have told CNBC that there has been a significant “rise in Russian oil deliveries to India since the start of the Russia-Ukraine war in early March – and New Delhi appears poised to buy even cheaper oil from Moscow. “India, as you know, imports 85% of its oil, so it is a real shock to the Indian economy when oil prices go up,” he said. “India is talking to Russia about buying oil at a significant discount… but it is a complex logistics system that transports 100 million barrels of oil a day around the world and to renew that, it is not going to go smoothly,” Yergin said. Correction: This story has been updated to reflect Dan Yergin who is now Vice President of S&P Global.
