Indian refinery executives see little chance of the government ordering a halt to Russian oil purchases despite America’s penalty, as India hardens its stance on US trade negotiations.
“The message from the government is ‘country first, commerce later’,” an industry executive said, interpreting this as the primacy of trade negotiations over short-term economic pain. India has dug in on talks with US, and conceding on crude would only invite further demands, executives and officials said, adding that focus is on projecting strength. PM Narendra Modi, external affairs minister S Jaishankar and commerce minister Piyush Goyal have all signalled that India would rather absorb the blow to exporters than bow to US pressure.
The government has issued no directive to refiners to stop Russian crude purchases, executives said. Still, refiners placed lower orders for September-loading cargoes compared with this year’s average amid tariff uncertainty. Executives, however, attributed this to narrower discounts of $1.5-$1.7 per barrel on Russian crude, compared with $2.5-$3 last year. With discounts slowly widening again, volumes for October-loading may rise, an executive said.
Switching away from Russian oil would not be difficult, given a well-supplied global market and low prices, but conceding to US pressure is unacceptable, executives and officials said. A quick shift to non-Russian supplies would have only a marginal and temporary impact on global prices, they added.
“Supply lines will only have to readjust. Russian oil is not sanctioned and will remain on the global market. The balance between supply and demand will not be swayed,” one executive said, noting that buyers of discounted Russian barrels in place of Indian refiners would simply substitute their original supplies.
Industry executives are closely watching the situation, mindful of the challenge of ensuring timely and adequate crude supplies for their refineries.
