China, ever helpful and cooperative, is making a hash of NATO’s sanctions on the Russian oil industry by importing record amounts of crude. In fact, China’s imports from Russia surpassed imports from their former number-one supplier, Saudi Arabia.
In May, China imported 2 million barrels a day from Russia — a nearly 20% increase from April. By comparison, China’s imports of Saudi crude in May averaged around 1.84 million barrels per day — up just 9% compared to May 2021, but down from 2.17 million barrels per day in April, according to the data cited by Reuters.
This is not only giving Russia an outlet for its sanctioned oil, but it’s also giving Russia badly needed access to foreign currency. The yuan isn’t the dollar, but it’s got far greater buying power than the ruble and can be traded for dollars much more easily.
India is also binging on cheap Russian oil.
Sales of crude to India have also surged, albeit from a much lower level than those to China; Russian crude already made around 15% of its imports before the war started, but those to India accounted for under 2% of its crude imports.
India bought six times more Russian oil from March to May compared to the same period last year, data from research firm Rystad Energy reports, while imports by China tripled during that period.
According to the International Energy Agency’s (IEA) latest global oil report, India has also overtaken Germany as the second largest importer of Russian crude in the last two months.
Considering that Russia was selling 4 million barrels per day to Germany before the sanctions, Moscow still has quite a ways to go to make up for its lost customers. But it helps that the EU and NATO have shot themselves in the foot by opening holes in the sanctions regime.
It turns out that, while Russia is banned from using international shipping to move oil, Greece, which depends heavily on its shipping industry, received a waiver on the sanctions.
The majority of Russian oil deliveries to Asia are transported by ship. Despite the West’s attempt to prevent Russia using international tankers as part of its sixth package of sanctions, exemptions given to Greece in particular, which accounts for half of the tankers used by Russia, have blown a large hole in the effort to hamper Russia’s oil exports by sea.
“Why is Putin cutting gas exports to Europe? The West – reluctant to sanction maritime insurance – has created a monster. The hard currency windfall from the rise in oil prices gives Putin the space to weaponise gas exports. He is swimming in cash. So why not turn the screws,” said Robin Brookes, chief economist at Institute of International Finance (IIF), in a tweet.
It’s ironic, but Europe is holding a gun to its own head in allowing the Greek shipping waivers.
“Ironically, the EU – by permitting the massive rise in Greek tankers taking oil out of Russian ports (blue) – is the biggest enabler of this weaponisation of gas exports, by giving Putin the shipping capacity to take his oil to places all around the world,” Brookes added. “Would Putin be turning the screws on Europe if we had sanctions on maritime insurance, stopping oil tankers taking oil out of Russia? No! He’d be battling a currency crisis the way Ukraine currently is, having to hike interest rates and scrounging for every unit of hard currency… By allowing Putin to export his oil globally, we’re giving him the means to cut gas exports to Europe. Sanctions on maritime insurance fix this, but the West must be willing to suffer high oil prices temporarily.”
Proof positive that NATO and the EU will never sacrifice to stop Russia. They are perfectly willing to allow other nations to feel the pain of shortages and high prices, but when it comes to doing something meaningful to stop Russia’s aggression, they pass the buck and leave the table.