Well played, India. From Andrewe Korybko at theautomaticearth.com:
Indian media revealed in mid-January that their country had been processing and re-exporting discounted Russian oil to the West, including the US, in a move that discredited the spirit of that de facto New Cold War bloc’s anti-Russian sanctions. Most observers brushed off those reports since they went against their worldview wherein it was taken for granted that the US-led West’s Golden Billion wouldn’t ever relieve pressure on Russia by having India serve as the middleman in their oil trade.
According to an expert quoted by Bloomberg in their latest report titled “Oil’s New Map: How India Turns Russia Crude Into The West’s Fuel”, “India’s willingness to buy more Russian crude at a steeper discount is a feature, not a bug, in the plan of Western nations to impose economic pain on Putin without imposing it on themselves.” Another one was cited as saying that “US treasury officials have two main goals: keep the market well supplied, and deprive Russia of oil revenue.”
That other expert added that “They are aware that Indian and Chinese refiners can earn bigger margins by buying discounted Russian crude and exporting products at market prices. They’re fine with that.” This insight from Bloomberg, which is held in high regard as one of the world’s premier business outlets, completely shifts the paradigm through which observers interpret the energy dimension of the Golden Billion’s anti-Russian sanctions.
Black markets are inevitable when governments introduce price caps and sanctions into legitimate markets. From Tsvetana Paraskova at oilprice.com:
- Sanctions on key oil exporters have given rise to a lucrative black market for crude.
- The EU embargo on Russian crude oil imports and the price cap on Russian crude are set to further increase illicit shipments of oil.
- Russia is already thought to be amassing a “dark fleet” of tankers to ship its oil outside the price cap regime.
The sanctions on the oil exports of Venezuela and Iran, and now Russia, have given rise to a lucrative under-the-radar oil trade in which less scrupulous vessel owners, shipping firms, and traders continue to sell sanctioned oil to those willing to take the risk to buy it.
The EU embargo on Russian crude oil imports and the price cap on Russian crude – in force since December 5 – are set to further increase illicit shipments of oil to countries outside the EU and the G7 that haven’t joined the so-called Price Cap Coalition.
Russia is already thought to be amassing a “dark fleet” of tankers to ship its oil outside the price cap regime and it has the playbooks of Iran and Venezuela to take a leaf out of and continue exporting large volumes of its crude and products. Russia could be using tried-and-tested tactics of labeling the oil as sourced from elsewhere, turning off tanker transponders, and even falsifying the positions of tankers via the Automatic Identification System (AIS) data to hide activity taking place hundreds of miles away from the false positioning data.
By using various spoofing tactics, producers and sellers of sanctioned oil still get to place their products with buyers who are happy to get heavily discounted crude.
But not all buyers, especially those in jurisdictions with strict controls and checks such as the U.S., are tempted to discard concerns and red flags about a cargo’s origin. Other buyers, especially independent Chinese refiners, are unfazed as their priority is to buy low-priced crude and make good profits refining it. China, the world’s top oil importer, continues to buy Iranian and Venezuelan crude, often masked as crude from Malaysia or Oman, various analysis and investigative reports have found over the past few years.
Chinese refiners are making a healthy vigorish, or vig, (bettors’ slang for the bookie’s cut) taking in Russian oil, refining it, and selling the products to Europe. From Irina Slave at oilprice.com:
- China’s oil imports jumped by 2 million barrels per day in September as the country prepared to supply fuel demand growth in Europe.
- The EU has an embargo on Russian crude coming into effect in less than two months and then an embargo on fuels two months after that.
- Europe will be hoping that China’s domestic demand remains weak, as it could become a key source of oil products over winter.
Crude oil imports into Asia jumped in September. Normally such news would spark hope for demand and, consequently, prices, but this time it’s more complicated. And it has less to do with Asian demand than demand in Europe.Oil imports in Asia rose by more than 2 million barrels daily last month, Reuters’ Clyde Russell reported in his latest column, noting that the bulk went to China and Singapore.
He then went on to point out that both China and Singapore had gone through refinery maintenance in August and utilization rates were up in September. On the one hand, it’s the normal preparation for winter. On the other, the EU has an embargo on Russian crude coming into effect in less than two months and then an embargo on fuels two months after that.
The Germans think they’re going to reconfigure one of their most refineries to substitute oil of differing grades from who-knows-where to replace steady, dependable, and uniform grade Ural oil they were receiving from Russia in six months. Good luck with that. From Jorge Vilches at thesaker.is:
Germans will soon passionately conjugate a very strange new verb amongst themselves, the infinitive form of which is “ to schwedt ”. Of course, all sorts of ironic phraseology will emerge in the blogosphere with creative commentariati wondering whether “to schwedt or not to schwedt”… or millennials surely indicating to “chill it, don´t schwedt it ”…
So, you may wonder what exactly is this ´schwedt´ thingy about ? Well, it all starts with Schwedt, a small greyish-dull industrial town in North East Germany right next to the Polish border – it doesn´t get much greyer than that – which is now getting ready for no more and no less than…(drumroll please)…sudden World Fame… or…”GAME OVER”.
Traffic today still continues to drive-by Schwedt gloriously unattentive with visitors naïvely unable to focus on anything special. But savvy technical buzz circles silently have it that the famous Schwedt Refinery – in a matter of weeks – will turn into the Mother of All Engineering & Political Battles ever that will define the future of Germany and Europe vis-á-vis the stubbornly desired banning of Russian oils. If this battle were lost ( or partially lost ) many firmly credible experts solemnly insist it would have irrevocable existential consequences with European countries turning into almost failed states. But then the question arises: Is it really possible – or even believable — that Germany (!) could actually fail in this essential Schwedt Refinery project it has set up for itself with absolutely no need ? How would it happen ?