Russia's crude oil exports to India gave Moscow far more money than previously recognised

Russia's crude oil sales to India are enabling it to earn far more money than what was previously believed, according to a report in Financial Times. The inflated shipping costs are enabling Russian companies earn much more money than recognised earlier, it said.

The report added that the charges may have raised more than $1 billion for Russiain a single quarter.

Even before Russian President Vladimir Putin announced war on Ukraine in February 2022, the European Union had already banned purchase and import of sea-borne Russian crude oil.

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At the same time, the G-7 countries had set a $60 per barrel price cap on Russia-borne crude oil. With that, the G-7 banned the use of Western-supplied maritime insurance, finance and other services unless they are sold below $60 per barrel.

All of these were part of what West believes, havebeen bolstering Moscow's ability to 'fund its war in Ukraine'.

Russia's crude oil imports to India: What happened?

According to official figures cited by Financial Times, Russia's crude oil exports to India have gone above 60 million barrels per month. India now accounts for nearly a quarter of Russia’s crude and refined oil exports.

Further, the Russian custom records cited by the paper from December 2022 to the end of June 2023 put out average price of crude oil shipped to India at around $50 per barrel.

Also watch |India guzzles Russian crude: India's imports of Russian oil hits new high

But the Indian custom data showed India paying about $68 per barrel after adding "cost, insurance and freight (CIF)" prices.

The average crude oil price in the international market was nearly $79 per barrel. Additionally, the CIF prices would further elevate the cost beyond $80 per barrel; implying that India still saved at least more than $12 per barrel of oil purchase from Russia.

An official at an Indian state-owned oil company cited by Financial Times said that Indian buyers were buying Russian crude oil inclusive of shipping costs.

The official further reportedly said that no negotiation was allowed over freight arrangements or costs.

Russia is earning more from crude oil sales than estimated earlier

In the three months to July, around 40 per cent of the oil shipped from the Baltic was carried by Russia-connected fleet.

The Financial Times cited freight cost estimatescalculated by pricing company Argus, which implied that this fleet may have earned more than $350 million in revenue on the route over the quarter.

The report claimed that $800mn of this fees was inflated.

The bottom line is that the Russian side may have covertly made a billion dollars more in revenue from crude oil sales Between May to July 2023 than previously recognised.

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