Indian refiners are still avoiding Russian oil as deals for delivery in April begin to be made, Reuters has reported, citing unnamed sources from the refining industry as well as traders.
According to the report, the avoidance comes in anticipation of the trade deal between New Delhi and Washington, scheduled to be finalized in March. The deal would see the United States reduce import tariffs on Indian products, including a 25% special tariff that President Trump imposed on India in punishment for its buying of Russian crude oil.
If the Reuters information is accurate, it means refiners will seek alternatives to Russian crude, which would tighten the availability of certain crude oil grades, fueling higher benchmark prices. In this, prices will also be supported by the latest sanction package prepared by the European Union against Russia, the EU’s 20th. That package aims to inflict broader pain on Russian seaborne oil trade by banning all Western shipping services for Russian vessels, including tankers, insurance, financing, and other maritime services.
Russian oil exports to India fell to 25% of the country’s total in December, down from 34% the previous month as U.S. sanctions on Russia’s two biggest exporters took effect. Then came the tariff squeeze that prompted Indian refiners to reduce purchases from Russia, even as they switched from Rosneft and Lukoil to non-sanctioned oil companies.
President Trump has made it a condition for India to stop buying Russian crude for the trade deal to succeed, but this would be a challenge. India relies overwhelmingly on imports to meet its crude oil demand. Because of this, the country is especially sensitive to price swings, which is why Russia became its top supplier in less than three years, with discounts resulting from sanctions proving a welcome bargain for Indian importers.
By Irina Slav for Oilprice.com
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