By Bryan Jung
Indian Oil Corp. India’s state-owned oil company, purchased 3 million barrels of crude oil from Russia earlier this week, defying Western pressure to avoid buying oil from Moscow.
New Delhi has not imposed sanctions against buying oil and gas from Russia nor has any plans to do so.
It has so far abstained on votes at the U.N. condemning Russian aggression in Ukraine.
It appears that India will continue its purchases despite sanctions against Russia by the United States and other Western countries.
According to Indian media reports, Russia is offering a discount on oil purchases of 20 percent below global benchmark prices.
India is the world’s third-largest energy consuming nation and it has acquired multiple cargoes of Russian oil from traders that would have otherwise have gone to Europe before western sanctions on Moscow.
Russian oil exports to India have quadrupled in March, or 360,000 barrels a day, nearly four times the 2021 average, as global energy flows have been reshaped since the start of Russia’s invasion of Ukraine.
The country is on track to hit 203,000 b/d for the whole month based on current shipment schedules, according to Kpler, a commodities data and analytics service.
Oil prices have surged in recent weeks, becoming a burden to oil-importing countries such as India, which receives 85 percent of its oil consumption from foreign sources.
Hardeep Singh Puri, the Indian oil minister, said to the Indian Parliament this week, that energy prices in India are more stable compared to Europe and the United States, which have risen only 5 percent, and that the government would act in the interest of local consumers within “the margin of persuasion.”
Indian demand for oil is projected to jump 8.2 percent this year to 5.15 million barrels per day (bpd), as its economy recovers from the devastation caused by the pandemic.
Iraq is India’s top supplier of oil at 27 percent of imports, followed by Saudi Arabia at around 17 percent, the United Arab Emirates with 13 percent, and the United States at 9 percent.
Russian crude oil normally constitutes about 5 percent of India’s total fuel imports, which were at 4.2 million bpd in 2021.
“India imports most of its oil requirements. We are exploring all possibilities in the global energy market. I don’t think Russia has been a major oil supplier to India,” said Arindam Bagchi, the spokesman for the External Affairs Ministry, in response to Western criticism of Indian purchases of Russian oil.
White House press secretary Jen Psaki, said earlier this week that Indian purchases of Russian oil do not violate U.S. sanctions, but strongly urged India to “think about where you want to stand when history books are written.”
India and Russia have had a longstanding partnership going back to after Indian independence, with President Vladimir Putin of Russia, visiting India last December for his second overseas trip since the pandemic.
The two countries also have several joint military, trade, and energy deals, such as Russia’s Rosneft 49 percent stake in Nayara Energy, the operator of India’s second-largest refinery.
India’s central bank and government is looking at establishing a rupee-ruble trading mechanism, which would facilitate trade after international payments to and from Russia were halted by western sanctions.
Last week, Russia’s Deputy Prime Minister, Alexander Novak and Singh Puri had a conference by phone to negotiate further trade between the two nations.
“We are interested in further attracting Indian investment to the Russian oil and gas sector and expanding Russian companies’ sales networks in India,” said Novak.
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