India, which gets more than a third of its oil imports from Russia, is likely to turn to supplies from the Middle East and Africa and other regions if it is forced to cut Russian imports due to possible U.S. penalties.
WHY IS INDIA IMPORTING RUSSIAN OIL?
India turned to purchasing Russian oil sold at a discount after Western countries imposed sanctions on Moscow and shunned its supplies over its invasion of Ukraine in 2022.
Russia has become the top supplier to India, accounting for about 35% of India’s overall supplies, up from less than 2% before the war in Ukraine.
Global crude prices surged to $137 per barrel on supply shortage fears in the wake of the Western-led sanctions before stabilising. The discounted Russian crude has reduced Indian refiners’ costs. India imports more than 85% of its oil needs.
HOW MUCH RUSSIAN OIL DOES INDIA BUY?
The world’s third biggest oil importer and consumer received about 1.75 million barrels per day of Russian oil in the first half of this year, up 1% from a year ago, trade data showed.
While Indian state refiners buy Russian oil from traders, private refiners Nayara Energy and Reliance Industries Ltd, operator of the world’s largest refining complex, have long-term supply deals with Rosneft.
WHY DOES TRUMP WANT INDIA TO CUT RUSSIAN OIL IMPORTS?
U.S. President Donald Trump has said he would raise the tariff charged on goods imported from India substantially from 25%, in view of New Delhi’s continued purchases of Russian oil. He has warned that countries purchasing Russian exports could face sanctions if Russia fails to reach a peace deal with Ukraine.
New Delhi has resisted the pressure, citing its longstanding ties with Russia and its economic needs.
However, the country’s state refiners have paused buying Russian oil.
WHAT ARE INDIA’S OPTIONS IF IT CAN’T BUY RUSSIAN OIL?
Besides Russia, India buys oil from Iraq – its top supplier before the war in Ukraine followed by Saudi Arabia – and the United Arab Emirates.
Indian refiners mostly buy oil from Middle Eastern producers under annual deals with the flexibility to request more supply every month. Since Trump’s sanctions warning, the refiners have bought crude from the United States, Middle East, West Africa, and Azerbaijan.
India has diversified its sources of supply to about 40 countries, oil Minister Hardeep Singh Puri says, adding that more supply is coming onto the market from Guyana, Brazil and Canada.
