Vladimir Putin needs help from China and India on oil Europe doesn’t want

Oil pumping jacks, also known as "nodding donkeys", in an oilfield near Neftekamsk, in the Republic of Bashkortostan, Russia, on Thursday, Nov. 19, 2020. The flaring coronavirus outbreak will be a key issue for OPEC+ when it meets at the end of the month to decide on whether to delay a planned easing of cuts early next year. Photographer: Andrey Rudakov/Bloomberg

President Vladimir Putin may need to count even more on China and India should the European Union ban Russian oil, with few other takers in Asia able to process the type of crude Europe typically buys.

EU leaders agreed to pursue a partial embargo on Russian crude oil shipped on sea, potentially costing Putin up to $10 billion a year in lost export revenue.

Though that could eventually leave more of Russia’s flagship Urals crude -- an oil brand that had been popular in Europe -- needing a new home, there will be limited buyers in Asia. That’s because the grade can’t easily be refined in large quantities in countries such as Sri Lanka and Indonesia that don’t have sophisticated processing and blending capabilities to handle the highly sulfuric type of oil, said traders.

That could lead China and India, which do have refineries that can process Urals, to pick up extra barrels. With Shanghai emerging from its months-long lockdown, Chinese state-owned and private refiners may have a renewed appetite to buy more from Russia, the traders said.

However, there is likely to be a limit on how much China and India can realistically buy too, with the two countries already mopping up record amounts of Russian oil that’s steadily been shunned by Europe since the invasion of Ukraine.