India Sends Diesel to China for First Time Since 2021 Amid US Tariffs & EU Sanctions: Report
In a rare move, India has sent a shipment of diesel to China for the first time since 2021, amidst the ongoing trade tensions and sanctions imposed by the United States and the European Union. According to a report by Bloomberg, around 5 lakh barrels of diesel from Russia-linked Indian refiner Nayara Energy, which controls India’s second-largest refinery, is heading to China.
This development comes as a surprise, given the strained relations between India and China in recent years, particularly over border disputes and trade tensions. However, it seems that the Indian refiner Nayara Energy has opted for a different route to circumvent the restrictions imposed by the US and the EU.
For those who may not be aware, Nayara Energy, formerly known as Essar Oil, has been facing sanctions from the EU for its alleged links to Russian President Vladimir Putin. The EU had imposed sanctions on Nayara Energy in 2021, citing its ties to Putin and the Russian government. Additionally, the US had imposed 50% tariffs on Indian exports, including diesel, in a bid to pressure India to reduce its reliance on Russian oil.
The cargo, initially bound for Malaysia, made a U-turn towards China’s Zhoushan, according to Bloomberg. This move is likely to raise eyebrows, given the strained relations between India and China. However, Nayara Energy may have seen this as an opportunity to diversify its customer base and reduce its dependence on traditional markets.
The timing of this shipment is also noteworthy, given the ongoing trade tensions between the US and China. The US has been trying to reduce its dependence on Chinese oil imports and has been encouraging other countries to do the same. India, which has traditionally been a major oil importer, has been trying to diversify its energy sources and reduce its reliance on Middle Eastern oil.
The shift in Nayara Energy’s strategy is likely driven by the changing global dynamics and the increasing competition in the global oil market. With the US shale revolution and the growth of renewable energy, the demand for oil has been declining, leading to increased competition among oil producers.
Nayara Energy’s decision to send diesel to China may also be seen as a strategic move to strengthen its ties with the Asian giant. India and China have been trying to strengthen their economic ties in recent years, and this move could be seen as a step in that direction.
It is worth noting that India’s oil imports from China are relatively small compared to its imports from other countries. In 2020, India imported around 1.4 million barrels of oil per day (mb/d), with the majority coming from Middle Eastern countries such as Saudi Arabia and Iraq. However, the country has been trying to diversify its energy sources and reduce its reliance on Middle Eastern oil.
In conclusion, India’s decision to send diesel to China for the first time since 2021 is a significant development in the global oil market. It highlights the changing dynamics of the global energy landscape and the increasing competition among oil producers. While the move may raise eyebrows given the strained relations between India and China, it is likely a strategic decision by Nayara Energy to diversify its customer base and reduce its dependence on traditional markets.
