ENB Publishers Note: Sanctions do not weigh heavy on Putin’s mind. Simply put, sanctions don’t work. With China and India buying oil at $85 per barrel, this will provide the cash flow he needs to keep the war moving. The other side of this story is the Biden administration asked Venezuela for more oil. Well several months ago, Venezuela and Russia inked a deal and Russia will be able to move products through Venezuela to the U.S. markets. Sanctions do not matter, and only hurt the citizens of the country.
On Friday, the Indian government announced that it will increase its imports of Russian oil, purchasing additional energy supplies from Russia – at a special discount rate. The initial purchase is said to be at least 3 million barrels of oil.
Based on today’s trading price at $106 per barrel, Moscow discount price for New Delhi will cost only $85 per barrel.
What makes this story explosive is the fact that this bilateral trade will be in the form of a ‘rupee-rouble’ exchange scheme – designed to beat the West’s sanctions against Russia. The mechanism will no doubt provoke fierce response from the US and its allies.
The news of Russia offering special discount rates for oil in native currencies has the potential to not only rock the global oil markets, but also global currency markets too – signaling a potential future demand for Russian roubles.
This new Eurasian oil deal is a stark reminder of how the conflict in Ukraine has created new complications for the Biden Administration – who is rapidly finding itself on shaky ground due to economic blow back in the West from its move to impose an unprecedented global blockade on Russian trade, finance and culture. Through economic warfare and sanctions, America and its allies have vowed to “collapse the Russian economy” in the hopes that this will cause the population to rise up and overthrow President Vladimir Putin. Thus far, there are no signs of such an uprising taking place, nor are the sanctions altering Russia’s calculus on the battlefield in Ukraine.
The Biden Administration is now scrambling to find a way to disrupt this inconvenient new partnership.
AP reports…
The state-run Indian Oil Corp. bought 3 million barrels of crude oil from Russia earlier this week to secure its energy needs, resisting Western pressure to avoid such purchases, an Indian government official said Friday.
The official said India has not imposed sanctions against buying oil and will be looking to purchase more from Russia despite calls not to from the U.S. and other countries.
The official spoke on condition of anonymity as he was not authorized to talk to reporters.
The United States, Britain and other western countries are urging India to avoid buying Russian oil and gas. Indian media reports said Russia was offering a discount on oil purchases of 20% below global benchmark prices.
Such prices have surged in recent weeks, posing a huge burden for countries like India, which imports 85% of the oil it consumes. Its demand is projected to jump 8.2% this year to 5.15 million barrels per day as the economy recovers from the devastation caused by the pandemic.
White House press secretary Jennifer Psaki said earlier this week that Indian purchases of Russian oil wouldn’t violate U.S. sanctions, but urged India to “think about where you want to stand when history books are written.”
Source: AP
