For the first time since 2021, India’s Russia-linked Nayara Energy is sending a ship to China following heavy sanctions from the European Union as the refinery struggles to maintain its procurement from Russia. A report in Bloomberg stated that a cargo of Indian diesel is now heading to China, which is the first such shipment since 2021, when the two neighbours engaged in an intense border tension following the clashes along Ladakh’s Pangong Lake.
The cargo, EM Zenith, sailed from the Nayara’s Vadinar terminal carrying around 496,000 barrels of ultra-low sulfur diesel on July 18, Bloomberg reported after compiling a report of port agent, Kpler. The cargo left the terminal hours before the EU announced sanctions on the Rosneft-backed refinery to intensify crackdown on Russia’s oil trade amid its ongoing conflict with Ukraine.
Bound to Malaysia, the cargo vessel made a U-turn in the Strait of Malacca, where it was anchored for 12 days. Following the EU sanction, multiple Nayara cargoes were stranded at the site, the report further stated.
Bloomberg said the vessel later updated its destination to Zhoushan, China.
Another Bloomberg report earlier flagged that Nayara is set to receive the lowest-ever crude supply this month as both the US and EU tighten sanctions against Russian oil exports.
Nayara is partly owned by Russian oil giant Rosneft PJSC, and was blacklisted by Brussels in July. It reportedly received its last delivery on August 9, and the report stated that no further shipment is likely this month for the refinery, according to the ship-tracking data.
Nayara faces payment difficulties
The EU sanctions have made it difficult for Nayara to receive payments, and hence, it has sought advance payment or letters of credit before loading fuel shipments.
Apart from this, India’s largest public sector bank, State Bank of India has now also discontinued processing international trade and forex transactions for Nayara Energy following recent tariff imposition by the US, reported ET.
The US administration, led by President Donald Trump has implemented a 25% additional tariff on India for its Russian crude oil import.
Are US tariffs bringing India, China closer?
India and China witnessed severe downfall in their relation after the 2021 skirmish at the Indo-China borders. This led to numerous rounds of military level talks and an understanding was later reached last year. Recently, External Affairs Minister (EAM) S Jaishankar met Chinese President Xi Jinping and apprised him of the development in India-China bilateral ties.
Reports suggest National Security Advisor (NSA) Ajit Doval is likely to meet Chinese Foreign Minister Wang Yi during his visit to the country ahead of the Shanghai Cooperation Organisation (SCO) Summit.
Trump had already imposed heavy tariffs on China, and the two sides briefly exchanged rounds of tariffs on each other. The US President has also imposed heavy tariffs on imports from India and Brazil (among the highest), and has warned a number of times that he would act against the BRICS (Brazil, Russia, India, China and South Africa) for working “against the dollar”.
The recent trade tussle between the India-US, US-China and Trump’s penalties on countries for Russian oil imports could play a vital role in bettering the relations between the Asian neighbours.