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Asian nations, especially China & India, find ways to import Russian oil despite sanctions

Millions of barrels of Russian oil are still finding a way to buyers almost a month after the country first invaded Ukraine. This has tempered concerns that a sanctions backlash will all but choke off supply and cause the market for physical cargoes to overheat. 


India’s oil refiners have grabbed multiple cargoes of Russia’s flagship Urals crude oil this month, potentially supplanting the Middle Eastern varieties they normally purchase from Abu Dhabi and Iraq. Meanwhile China’s private processors are still thought to be targeting their favoured cargoes from the east of Russia – likely at knock-down prices. 


Since Russia invaded Ukraine late last month, the market has been twisting on two vital questions: How much crude oil will Moscow end up selling, and where? There’s been a buyers’ strike across swaths of Europe in response to the invasion, but what’s less clear is how much other regions – especially Asia, the top demand centre – will purchase. 


“Russian barrels must look tempting,” said John Driscoll, the chief strategist of JTD Energy Services, adding that his view was that measures against the country would nonetheless curb buying of its crude oil over time. “Resourceful traders may explore ways to move cargoes – the Chinese won’t be intimidated by US sanctions and will remain the largest importer of Russian crude. India is the next one to watch.” 


At least for now, what’s going on with the buying and selling of non-Russian oil suggests that traders are becoming less fraught about the threat of supply shortages, even if trading the nation’s barrels isn’t risk-free, and spreads on Brent oil point to a market that remains incredibly tight by historical standards. 


At the moment, there are no sanctions on directly prohibiting purchases from Russia. But there are worries about what steps might ultimately be taken if the war drags on. Financing, insuring and shipping of Russian petroleum have also become much more complicated by the measures that the West has taken. 


European officials are debating the idea of an embargo on Russian oil sales, although the bloc is divided on the idea, and Germany opposes such a step. 


For now, though, traders appear to be taking the view that the flow of Russian oil is helping in Asia. 

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