One of US President Joe Biden’s economic advisers said India and China may be buying more Russian oil than the US government thought. He said the purchase of Russian oil by the two major countries eased supply constraints in world markets and led to the recent drop in oil prices.
West Texas Intermediate fell 5.6% to $103.31 a barrel, while Brent fell 5.2% to $108.62.
In an interview with Bloomberg TV on Wednesday, Cecilia Rouse, chair of Biden’s Council of Economic Advisers, said, “Right now, in particular, oil markets are pretty volatile.”
“I’ve heard part of the explanation is that China and India are actually buying more Russian oil than maybe we realize, so there’s more supply in the market. “
As Western sanctions weigh on Russia following the Ukraine war, Vladimir Putin sold Russian oil to Asian markets at a discount amid huge demand.
At the start of 2022, around two-thirds of Russian crude was exported to Europe, now around 50% of the country’s oil goes to Asia, according to Gazprom Neft managing director Alexander Dyukov.
Most of the extra oil went to two countries – China and India – reports The New York Times citing shipment data from Kpler, a market research firm.
China’s imports of Russian oil rose 28% in May from the previous month, hitting a record high and helping Russia overtake Saudi Arabia as China’s top supplier.
The other biggest importer of Russian oil was India, which went from almost no Russian oil to over 760,000 barrels per day.
Additionally, the Indian government has asked state oil companies to buy large volumes of Russian crude as prices fell sharply during Moscow’s war against Ukraine, The Wall Street Journal (WSJ) reported on Tuesday.
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Indian companies have found ways to continue buying Russian oil despite the latest round of European sanctions, according to the report.
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To boost the appeal of its oil, Russian oil company Rosneft allowed traders to pay for its crude months after it was delivered without a letter of credit from a bank, the WSJ reported.
(With agency contributions)
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