New Delhi: In what may sound like bad news for the US, Saudi Arabia is lapping up Russian fuel oil like never before, cocking a snook at the US-led sanctions on Russia. While energy-deficient India and China are among the world’s top guzzlers of fuel, their soaking up fuel oil from Russia at deeply discounted prices is easy to understand, but oil-rich Saudi Arabia?
For starters, Saudi Arabia is the world’s largest exporter of oil that leads the OPEC, a cartel of oil-producing economies. According to data accessed by Reuters, in April-June 2022, Saudi Arabia imported 647,000 tonnes every day from Russia, up from 320,000 tonnes in the same period a year ago. That is a jump of 102 percent. So what is cooking?
While Saudi buying Russian oil in summers is not out of the ordinary as more fuel oil is needed for cooling purposes, the discounts the Russians are offering are unprecedented. So, buying Russian fuel frees up more and more Saudi Arabian crude oil for international exports in which it is a market leader.
This is happening at a time when oil prices are galloping across the world and US-led sanctions imposed on Russia have made Russian oil a shunned item for most countries that are fearful of the US’ wrath. So it works out very fine for the Saudis. On average, Russian oil is going at an average discount of about $35 per barrel to Brent, the global benchmark.
While India has not been able to avail of the discount to the fullest due to increasing shipping and insurance costs that have spiraled due to the Ukraine conflict, it is still getting Russian oil at a discount of about $10 a barrel. But even then, from a mere 2% in February 2022, India has already increased its import of Russian oil by ten-fold with Russian crude now meeting 20% of India’s requirement.
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Russia has also become the second biggest supplier of oil to India edging out Saudi Arabia to the third spot. Iraq still remains India’s biggest supplier of oil. The US-led sanctions on Russia were imposed in the aftermath of its forces landing in Ukraine on February 24 in what Russia calls a “special military operation”.
The Saudi association with the Russians also makes a mockery of the US-led sanctions. Taken together with the fact that the Kingdom has applied for membership of increasingly assertive BRICS, it is indicative of signs that Saudi Arabia wants to pursue its own path and not one that is just adherent of US policies. BRICS, a platform of emerging economies that was set up in 2009, includes India, Brazil, Russia, China and South Africa.
According to reports, besides Saudi Arabia, Iran and Argentina are among a slew of nations that have applied for BRICS membership. Such a new grouping may turn out to be the most formidable one that the US-led world order has ever faced.
At the moment, BRICS represents about 43 % of humanity with just India and China together representing 36% of the world population. This is against the European Union (EU) representing only about 9.8% of humanity while the 30-member NATO alliance represents about 12.22% of the world’s population.
