President Donald Trump’s risk to impose monetary penalties on Russia has put the highlight on the 2 greatest consumers of Moscow’s crude — India and China — however markets stay skeptical of disruption, for now.
India grew to become a serious importer of Russian oil for the reason that invasion of Ukraine in early 2022. Greater than a 3rd of total purchases have been from the OPEC+ producer this 12 months, in contrast with lower than 1% previous to the struggle, in response to information from Kpler. China’s imports have additionally climbed over the identical interval.
Nonetheless, the preliminary response from the market to Trump’s remarks was nonchalance. World benchmark Brent fell nearly 2% to shut beneath $70 a barrel on Monday, suggesting little concern across the potential affect to crude flows.
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Trump mentioned penalties would come within the type of “secondary tariffs,” with out offering particulars, and can be applied in 50 days if Russia doesn’t finish hostilities with Ukraine. Matt Whitaker, the US ambassador to NATO, mentioned the motion successfully represents sanctions on nations shopping for Russian oil.
Whitaker particularly cited India and China.
Russian flows to India reached 2.1 million barrels a day in June, the largest month-to-month consumption in almost a 12 months, and near the file set in Could 2023, information from Kpler present. China’s purchases haven’t accelerated on the similar tempo, however have been persistently above 1 million barrels a day for the reason that struggle.
“If push actually involves shove, and India can’t purchase any crude oil from the Russian system, then India has optionality with the opposite OPEC members,” mentioned Mukesh Sahdev, head of commodity markets at Rystad Vitality A/S. However “will probably be at the next price,” he added.
Barrels from the Center East and Africa might assist plug the hole of misplaced Russian provide, however the crude can be dearer. Imports from Saudi Arabia in Could had been $5 a barrel increased than these from Russia, whereas shipments from Iraq had been about 50 cents extra dear, in response to official information from India’s Ministry of Commerce and Business.
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