US asserts India hid Russian origin of fuel shipped to US – India central bank

The US has informed India of its concern that India was being used to export fuel made from Russian crude. The Russia-sourced oil was thought to have been subject to ship-to-ship (STS) transfers on the high seas, thus enabling the oil to be supplied to the US without appearing to contravene the country’s sanctions against Russia.

The US Treasury Department has alleged that an Indian ship took the oil from a Russian tanker in an STS high-seas transfer, subsequently bringing the cargo to a port in Gujarat, where it was refined and re-exported.

Reserve Bank of India deputy governor Michael Patra said that “the refined output was put back on that ship and it set sail without a destination. In the mid-seas it received the destination so it reached at its course, went to New York,” Patra said, while speaking at an event to celebrate 75 years of India’s independence.

Patra’s comments constituted India’s first official public reference to the US concerns. India declined to join sanctions against Russia or to condemn the Russian invasion of Ukraine.

Patra said he was told 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. “So that’s the way war works. It works in strange ways,” he said.

Although India, a major oil importer, rarely bought Russian oil before February 2022, the western sanctions resulted in a glut being offered by Russia at discounted prices, which India took advantage of. Indian refiners have been snapping up discounted Russian oil. This, provided the refined product is used domestically, might be an irritant to the US and Europe, enabling as it does Russia to resist the impact of the economic sanctions, but it would be no more than that. However, if India were to be shown to be a conduit to enable Russia to export energy to the US, the situation would become more serious.