Despite threats of penalties from U.S. President Donald Trump, India will continue to purchase Russian oil, according to government sources. This decision underscores India's commitment to its energy security and its long-standing relationship with Russia.
Trump's remarks followed announcements of a 25% tariff on all Indian goods and penalties for purchasing arms and energy from Russia. He also stated he had heard India would no longer be buying oil from Russia, which he called "a good step". However, Indian officials have refuted this claim. According to sources, there has been no change in the government policy related to importing Russian oil, and no directives have been issued to oil companies to cease these imports.
India defends its continued oil imports from Russia on several grounds. Firstly, Indian officials emphasize the existence of long-term oil contracts that cannot be easily terminated overnight. Secondly, they argue that these imports help stabilize global oil prices, which have remained subdued despite Western restrictions on the Russian oil sector. By purchasing Russian oil below the price cap set by the European Union, India asserts that it avoids direct sanctions and contributes to maintaining affordable energy supplies. Randhir Jaiswal, India's foreign ministry spokesperson, stated that India considers market availability, offers, and the prevailing global situation. He also highlighted India's "steady and time-tested partnership" with Russia.
Russia has become India's top oil supplier, accounting for approximately 35% of its total supplies, a significant increase from less than 1% before the conflict in Ukraine. India imports over two million barrels of crude oil daily from Russia, making it the second-largest buyer of Russian oil, after China. This increase in Russian oil imports followed Western sanctions on Russia after its invasion of Ukraine, which led Russia to offer discounted oil to willing buyers.
Despite the government's stance, there have been some fluctuations in India's Russian oil imports. Recent data indicates that state-run refiners had temporarily halted purchases due to reduced discounts and EU sanctions on Nayara Energy. Additionally, overall Russian oil imports in July decreased by 24% compared to June. This reduction was offset by increased crude deliveries from other suppliers, including Iraq, Saudi Arabia, and the United Arab Emirates.
The Indian government maintains that its oil companies operate in compliance with international norms. They emphasize that Russian oil has not been directly sanctioned by the U.S. or EU and is subject to a price-cap mechanism designed to limit revenue while ensuring global supplies. Without India's absorption of discounted Russian crude, combined with OPEC+ production cuts, global oil prices could have surged, intensifying inflationary pressures.
In conclusion, despite pressure from the United States and some fluctuations in import volumes, India intends to continue its purchase of Russian oil. The decision is rooted in long-term contracts, economic considerations, and the strategic partnership between India and Russia. India believes its approach helps balance global energy markets and ensures its own energy security.
