India has not halted oil purchases from Russia in response to the US President’s tariff threat and continues to buy based solely on economic considerations, said AS Sahney, Chairman of Indian Oil Corporation (IOC), the country’s largest oil firm.
Purchase volumes may fluctuate monthly based on the discounts offered on Russian crude grades like Urals. While discounts had previously reached as high as $ 40 per barrel, they have narrowed to just $ 1.5 late last month, resulting in reduced offtake. Discounts have since widened to about $ 2.70.
However, India’s intent to continue buying Russian oil remains unchanged.
India became the largest customer of Russian oil from 2022, after western countries shunned Russian oil and imposed sanctions on Moscow for its invasion of Ukraine.
Sahney said refiners like IOC buy crude oil from Russia purely on economic consideration and have not been asked to cut or boost purchase in response to US tariffs, he said.
“There is no pause,” he said. Russian oil has continued to flow to Indian refiners in July as well as this month.
“We continue to buy, purely based on economic considerations, that is to say if the pricing and characteristics of the crude make sense in our scheme of processing, we buy,” he told reporters here.
“No special effort is being made to either increase or decrease (the import volumes). We are buying crude as per economic considerations,” he said.
Imports from Russia made up for 22-23 per cent of all the crude oil that IOC refineries processed in the April-June period.
US President Donald Trump last week announced an additional 25 per cent tariff on US imports from India — raising the overall duty to 50 per cent — as a penalty for the country’s continued imports of Russian oil. Since the steep tariffs are likely to hit the $ 40 billion of non-exempt exports that India does to the US, there has been chatter around stopping or curtailing oil imports from Russia.
“There are no sanctions on Russian crude,” he said. “India has not done anything that violates any sanctions”.
Separately, Bharat Petroleum Corporation Ltd (BPCL) Director (Finance) Vetsa Ramakrishna Gupta on an investor call said the discounts have narrowed to $ 1.5 per barrel, and led to lower imports last month.
In the first quarter, Russian oil made up 34 per cent of BPCL’s crude intake and the company hopes to return to a 30-35 per cent ratio as long as there are no sanctions, he said.
Before February 2022, Russian crude oil accounted for less than 1 per cent of India’s total oil imports. However, after Moscow’s invasion of Ukraine, western nations shunned Russian energy, leading to Russian crude being available at discounted rates compared to global benchmarks.
Seizing the economic opportunity, India ramped up its purchases, significantly increasing its reliance on Russian oil to meet domestic energy needs.
Russian crude oil now meets 30 per cent of the requirement.
Sahney said at no time was import of crude oil from Russia sanctioned and so India continued to purchase keeping in mind economic considerations.
“Such purchases will continue unless sanctions are imposed,” he said. “We have not got any instruction (from the government) to either increase or decrease purchase. We are doing business as usual.”
About talk of refiners being asked to increase purchases from the US in a bid to placate Trump, IOC Chairman said, “Neither are we being told to buy more nor are we told to buy less from US or any other destination. Economic considerations dictate our actions.”
