RUSSIA - INDIA Increases RUSSIAN IMPORTS by 500% & Buys $15 BILLION of OIL & COAL at Huge Discounts

Added: 2026-05-27

[00:00:03]Hi. Welcome back to Joe Blogs. One of the big questions that everybody's asking right now is whether or not Russia will be able to successfully pivot to the east and start selling large quantities of gas and oil and coal to China and India in replacement to all of the deals that it's losing from the Western world. And this is a really big conundrum because obviously there's a lot of transport costs involved and there's also the issue of secondary sanctions. That there will be pressure applied against both India and China not to do those deals to try to exert more pressure on Russia to stop the war in Ukraine. And so far most of the analysis that everybody has undertaken including me has been focused on China. But in today's episode I want to have a look at India because India is a really big purchaser and is starting to do a lot more deals with Russia. So in today's episode we'll have a look at exactly how much business India has been doing since the start of the war with Russia and it's increased a lot. We'll then have a look at what's going on in the Indian economy and talk about deals that are now being done in Indian rupees rather than US dollars. And then we'll have a look at a recent incident where India has recently taken some oil from Russia and exported it to the USA. So that's becoming a bit of a political problem.

[00:01:24]And then finally today I'll wrap up with my summary as to what I think is likely to happen over the course of the next three to six months and what the implications of this are for both Russia and the global economy. So before we get started as usual I'm going to ask you for a thumbs up at some point during this video if you're enjoying the content. And also please subscribe if you haven't done so already. Don't forget I always include chapters in these videos so you can skip over stuff if you're not that interested in it or you get a bit bored. And if you'd like to support the channel please have a look below where you'll find links to YouTube super thanks and membership as well as buy me a coffee and Patreon.

[00:01:59]Historically, India and Russia have not been major trading partners. This table shows India's imports for 2021 split by destination country. You can see that the largest trading partner was China, which represented around 16% of all imports, which equates to around 87 billion dollars worth. The United Arab Emirates and the United States come in second and third, and both equated to more than 40 billion dollars worth of business. If we look further across the table, Russia actually came in at number 20 on the list of countries importing goods to India, and the total value of purchases were around 8.7 billion dollars.

[00:02:40]This table shows the total amount of exports that India made by country, and you can see that the United States is the largest single market, representing around 18% of all exports, which in 2021 equated to around 71.5 billion dollars. Interestingly, the UAE and China are second and third on the list. So, the top three countries are the same for imports and exports, albeit in a reverse order. And the amount of business that India did with both countries was around 25 billion dollars.

[00:03:10]If you look at the far right-hand side of this chart, you can see that Russia is actually showing, and it came in 31st on the list of countries that India exports to. And the total value of exports in 2021 equated to around 3.3 billion dollars. So, you can see from this analysis that prior to the Ukraine war, Russia and India were not major trading partners. India imported around 8.7 billion and exported around 3.3 billion to Russia.

[00:03:40]This chart shows the amount of crude oil that was imported by China, India, and Turkey in the first 7 months of 2022.

[00:03:50]The blue bar chart shows the purchases made by China, the red bar chart shows the purchases made by India, and the green bar chart represents Turkey. If we look at the Chinese figures first, in January prior to the invasion of Ukraine, China was importing around 900,000 barrels of Russian oil per day.

[00:04:07]That figure dropped to just under 800,000 in February, which was the month that the invasion started. It rose back to around 900,000 in March, and we then saw a steady increase in the imports by China through to June, when China was importing over 1.2 million barrels per day. And that figure dropped slightly in July, but over the course of the first 7 months of 2022, China has been consistently buying around a million barrels of oil per day from Russia. So, there's been a fairly high level of consistent trade between the two countries. If we look at what's been happening with India, it's a very different story. In January, India purchased less than 100,000 barrels of oil per day, and in February, there were no recorded purchases. So, over the course of the first 2 months, which is the period before the Ukraine war started, the amount of Russian oil purchased by India was very low. The volume of purchases started to increase in March, and in the first 4 months of the Ukraine war, we saw a rapid increase in the volume of oil being purchased by India from Russia. And in June and July, the volume purchased was more than 1 million barrels per day. So, the volume of oil being purchased by India is now very close to the amount being purchased by China, and the rate of increase has been far more rapid. Before we leave this table, I'll just finish off on the situation with regards to Turkey, because as you'll know if you follow the channel, Turkey is a country that we follow in some detail here. And you can see that prior to the war, Turkey was buying oil from Russia, around 200,000 barrels per day. That dipped slightly in March, but we've seen a general increase in the amount of oil that Turkey is buying. However, Turkey does have a lot of budgetary issues right now. They've run short of cash and therefore they're now struggling to be able to pay for all of these imports. Now, if you are interested in the relationship between Turkey and Russia, have a look at a video that I posted recently, which talked about the new trading relationship that Turkey and Russia are looking to form.

[00:06:06]This table shows the 15 largest importers of coal in 2021. And as you can see, India is the number one importer globally and in 2021 imported more than 25 billion dollars worth of coal, which represented around 17% of the global market for imports. And the main reason that India is importing so much is that it still relies upon coal for the generation of electricity.

[00:06:31]Almost three quarters of all the electricity comes from coal. So, India has to import massive volumes. And it's interesting when you look at the rest of this table, that it's dominated by Asian countries. Japan comes in at a close second to India, followed by China, South Korea, and Taiwan. Germany and Turkey break up the Asian dominance, but they are followed by Malaysia, Vietnam, and the Philippines. And this really highlights the fact that a lot of countries in the world are still reliant upon coal for generating electricity. We haven't moved away from fossil fuels.

[00:07:01]There's always a lot of talk about renewable energy, but the percentage of renewable energy globally is still small. A lot of countries are still burning coal. And this chart shows the countries that are the 15 largest exporters of coal. So, you can see that Australia has a dominant position holding around 36% of the total market, equating to about 44 billion dollars.

[00:07:23]Indonesia comes in at number two, and third on the list is Russia, followed by the USA, South Africa, Canada, Colombia, Mongolia, Mozambique, and Kazakhstan. In terms of where India purchases most of its coal from, the biggest market is Indonesia, predominantly because of the geographic location. Coal is quite bulky, so therefore it's expensive to transport over long distances. So therefore it usually makes sense to source coal locally. The second largest supplier is South Africa, followed by Australia, the USA. Mozambique and Colombia tend to alternate at number five on the list depending on what's happening with prices, and Russia comes in after these countries. So historically there has not been a huge trading relationship between Russia and India with regards to coal. However, in July Russia became India's third largest coal supplier. With imports rising by 20% to a record 2 million tons. And the main reason that India has been buying large quantities of coal from Russia is that Russia have been offering huge discounts, particularly for thermal coal. Now thermal coal is the most attractive form because it holds the most heat value. And the amount of thermal coal imports made by India actually increased by more than 70% in July compared with June to a record 1.3 million tons. And the main industries that were driving these purchases were Indian cement manufacturers and steel makers. And one thing that's interesting to note is that the total amount of coal imports in July for India actually fell by around 10% compared with June. So proportionally the amount of trade done with Russia has increased even more because we've seen a big increase in Russian deals at a time when the total purchases of coal reduced.

[00:09:02]India is importing large amounts of oil and coal. And as a result of the increased prices which have been caused by the Ukraine war, this has put a lot of pressure on the Indian economy. And in July the Indian trade deficit widened to more than 31 billion dollars. And this compares to around 10.6 billion for the same period in 2021. In an effort to stimulate the economy and to reduce this deficit, the Reserve Bank of India recently announced that it was allowing importers and exporters to pay in rupees, which is a move seen as making trade with Russia and South Asian neighbors easier instead of relying on US dollars. India's trade secretary stated that the rupee denominated sales will be a big big advantage. I see in the next two months 8 to 9 billion of trade with Russia and Sri Lanka. If you follow the channel, you'll know that Sri Lanka is currently in a state of crisis.

[00:09:53]The economy has collapsed and India is doing a lot of business. They're helping the Sri Lankan economy. They're giving them credit. They're giving them food and fuel. So, this announcement that India and Russia will start doing business in Indian rupees is really interesting because since the start of the war, the total value of imports to India from Russia have increased by more than five times to more than 15 billion dollars compared to 2021. However, the value of exports from India to Russia have actually fallen to around 850 million from 1.3 billion due to the lack of payment settlement mechanism as a result of the sanctions that have been applied against Russia. So, what these figures are showing us are that Russia are unable to source dollars to be able to make payments to India and this is hampering India's exports. So, by switching the deals to rupees, they won't have these problems because the transactions will be able to go ahead.

[00:10:46]Russia is unable to source large amounts of dollars right now, but because of the huge increase in the amount of imports that India is now doing with Russia, that means that a lot of payments can be made in rupees and those rupees can then be used to pay for the exports from India to Russia. So, this becomes a symbiotic relationship. The two countries can help each other by dealing in the rupee currency rather than having to deal in US dollars, which is obviously an exchange issue for both countries.

[00:11:15]Now, as I'm sure you're fully aware, the USA have applied full sanctions against Russia. So, they no longer want to buy any oil or any other products directly from Russia. And this embargo applies to any oil that originates from Russia. So, the USA do not want third parties buying Russian oil and then selling it on to the USA. And the US has now accused India of hiding the origin of some Russian fuel that's been shipped to the USA.

[00:11:39]The US Treasury Department told India that an Indian ship picked up oil from a Russian tanker on the high seas and brought it to a port on the west coast where it was refined and shipped on. As I've just mentioned, the US sanctions on Russia prohibit the import to the United States of Russian origin energy products including crude oil, refined fuels, distillates, coal, and gas. The Reserve Bank of India's Deputy Governor responded by stating that the refined output was put back on that ship and it set sail without a destination. In the mid-seas it was advised of its destination and went to New York. He went on to state that the Russian crude was processed and converted into a distillate used for making single-use plastic. He did not identify the Indian vessel or refiner. He finished up by saying, "That's the way war works. It works in strange ways."

[00:12:28]So, what's the summary and conclusion today? Well, I wanted to post this video because we've been talking a lot about the relationship between Russia and China and there's been a lot of speculation as to whether or not China will start buying huge quantities of oil and gas directly from Russia. But, India is also a large importer of energy products and oil and coal are really important to the economy. And the Indian economy is under pressure right now because they're having to buy in large amounts of energy and those prices have gone up considerably since the start of the Ukraine war and that's putting pressure on all countries that have to import energy. And India is no exception and we've seen that the trade deficit has ballooned since the start of the war. The Indian authorities have not condemned the Russian invasion of Ukraine and have not joined any of the sanctions and they've stated categorically that they will do the best deals possible for the Indian economy.

[00:13:21]And the deals that have been offered to India by Russia include huge discounts.

[00:13:25]So, they've become very attractive from an economics perspective. And that's why we've seen a massive increase in the volume of oil and coal that Russia is buying because they're being offered the best price in the market. So therefore, they're going to take it. Now, the interesting question here is what will happen with regards to secondary sanctions. I've just touched on a story where Russian oil was accidentally taken to America by mistake. And of course, the US authorities are not happy about that. But at the moment, no pressure is being applied to India with regards to the general purchases that it's making.

[00:13:57]And the main reason for that is because the European Union right now is still having problems cutting its ties with Russia. Because of the way that the gas market has been built up, lots of gas is being piped directly to different countries. And it's going to take time and a lot of expense to be able to replace that. And it's the same situation with oil. There are a lot of pipelines that Russia have put in place.

[00:14:18]And this is very difficult to replace if you're a landlocked country because you don't have a port. And it's quite difficult to transport large quantities of oil over vast distances. So as it stands right now, the European Union is still buying large amounts of energy directly from Russia. But those amounts will diminish over the course of the rest of 2022. The EU has made a statement that by the end of December, it wants to stop the purchase of all oil. And gas will follow in due course.

[00:14:46]Once all of the countries in the West get to the point where they're no longer buying large quantities from Russia, then we will start to see the secondary sanctions being applied. Because it's hypocritical right now. The European Union can't demand that India and China don't do any deals with Russia when they're still doing deals themselves.

[00:15:03]But once they get to the situation where they're clear of those purchases, then some pressure may start to be applied on India and China. And it will be really interesting to see what happens. Because the US and Europe represent really big export markets for India. That's important to the Indian economy. So at the very basic level, there may well be a discussion about the application of additional tariffs to Indian imports in Europe and the USA if they continue buying Russian crude, or it may be that they're threatened with sanctions. So, the US and Europe may say to India, "We will hit you with the same sanctions that we've hit Russia with if you continue to buy large quantities of energy." And that will be a really interesting discussion because the Indian authorities want to do the best for India. They want to find the best deals in the market. But if those deals are then going to damage the amount of exports that India are making across the world, then that will have its own detrimental impact on the Indian economy. So, it's going to be a really fine balancing act. As it stands right now, India can buy as much as they want, and I'm sure over the course of the next 6 months, we will see an increase in those volumes because Russia is offering the best deal in the market, and India's taking it. But if this war is still going on by the end of 2022, and the EU to cut all of its ties, then I think we will see a lot of pressure being applied on India to stop doing these deals. And if they do stop doing these deals, that will be disastrous for Russia. As we've discussed before, if you're pumping millions of barrels of oil per day, you need to find a home for that oil because there's nowhere to store it. You don't have large tanks that you can put it into in Russia. You need to put it onto ships. You need to move it to the markets who are buying it. If there are no markets, if India and China don't buy massive quantities, then Russia would be forced to cap its existing wells, and that will be absolutely disastrous. Once you've got a well operational, the last thing that you want to do is switch it off. So, the next 6 months are going to be really fascinating, and I'll keep you posted on any further news and developments as and when I come across them. So, hopefully you've enjoyed today's episode. You've enjoyed finding out a bit more about India and Russia, what's going on right now, and what's likely to happen as we go through the rest of this year and into 2023. If you've liked what I've said today, then please give me a thumbs up and don't forget to subscribe if you haven't done so already.