America, Asia fuel Europe outside Russian sanctions
The prevailing trade sanctions slammed on Russia by American and European countries mean that only countries with higher production and refining capacity are available for commercial gains from the dispute.
According to Rystad Energy, Whereas the United States and Canada take up the displaced European demand for crude oil and liquefied natural gas (LNG), India and China grab the European demand for refined products including diesel, aviation fuel and other products.
A research by the European energy consultancy Rystad suggests that Western Europe has broken free of direct Russian oil imports but still relies on the enemy country for indirect supply which confers commercial advantage to friends of the enemy.
Whereas the UK and much of Europe have shifted to other suppliers like the US and Canada to reverse a years-long rise in reliance on Russian oil and gas before the Ukraine conflict, quantities of Russian fossil fuel have kept arriving via refineries in other countries.
Rystad stated that cutting off Russian supplies has proven a slow and illusory task, with the Kremlin selling more crude oil to countries like India and China who process them into products like diesel that could be sold on to the UK and Europe.
“Oil that was initially flowing from Russia into Europe is now going to China and India, from where suppliers are shipping to Europe,” a Rystad analyst was quoted by agency sources.
The Centre for Research on Energy and Clean Air, which tracks Russian energy exports by value and destination, estimates that Russia has earned €605bn (£517bn) from fossil fuel exports since February 2022 when it invaded Ukraine. About €188bn of that money came directly from EU countries.
Ashley Kelty, director of oil and gas research at Panmure Gordon investment bank, said the UK had halted direct imports of oil from Russia but the reality was more complex.
He said: “The UK was dependent on Russia for diesel fuel – 30pc came from Russia pre sanctions. This has been replaced by Russian diesel refined in India and China, and therefore outside sanctions.
“The EU was very reliant on Russian gas – about 40pc of all gas used came from Russia. This has been replaced by US LNG and by demand destruction through two mild winters and the collapse of German industrial demand.
“So the reliance on Russia is largely broken but they still remain important to global supply, as China and India buy much of their products now – albeit at large discounts. If they were forced to exclude Russia, then there would be another energy crisis with huge shortfalls in crude and LNG supplies.”
