Some refiners in India are preparing to reduce their purchases of Russian crude, Reuters has reported, citing unnamed sources in the know. The sources said the reduction would be gradual.
The report follows an announcement by President Trump that India had agreed to reduce its imports of Russian energy after months of stating it would not do so. Per Trump, India’s Prime Minister Narendra Modi had assured him that Indian refiners would stop buying Russian crude “within a short period of time”.
“So I was not happy that India was buying oil, and he (Modi) assured me today that they will not be buying oil from Russia,” Trump told media on Wednesday, as quoted by Reuters. “That’s a big step. Now we’re going to get China to do the same thing.”
Russian crude accounts for a third of India’s total oil imports. The country turned from a minor supplier into the subcontinent’s top oil seller as the barrage of sanctions that the West leveled at Moscow prompted discounts that significantly reduced India’s import bill. The country depends on imported oil to cover as much as 85% of its demand, which makes it extra-sensitive to price fluctuations.
Russia is one of the top-three oil exporters in the world, meaning any pressure on its exports should be applied with care to avoid a price shock. Indeed, President Trump’s statement about PM Modi pushed oil benchmarks higher earlier today because of the supply tightening effect such a move by India would have.
Earlier in the year, in an attempt to force India to stop buying Russian oil, President Trump slapped an additional 25% tariff on all Indian goods coming into the United States. At the time, the Modi government reacted sharply, noting there were energy security implications if Indian refiners stopped buying Russian oil.
By Irina Slav for Oilprice.com
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