India Ignores US Oil Blackmail

By Rhod Mackenzie

India continues to purchase Russian oil, its refineries are operating at full capacity, and negotiations are underway for wholesale purchases of raw materials in September. US President Donald Trump has issued a formal request to the government of India, urging them to refrain from purchasing Russian oil. This request comes with the prospect of tariffs and secondary sanctions being imposed by the United States. As industry leaders have attested, Russia has emerged as India's foremost supplier, and it is imperative to adhere to contractual obligations.
On Saturday, India refuted Western media reports that local oil refineries had allegedly suspended purchases of Russian oil. According to a source in the Indian government, Russian crude oil continues to enter the country. Decisions on this are made based on prices, logistics and other economic factors. Furthermore, the contracts concluded with Russia are long-term and cannot be terminated with immediate effect.

According to the New York Times, the Indian government has not issued any instructions to oil companies to reduce imports from Russia. At the same time, energy purchases are carried out in accordance with international standards. Furthermore, Russian oil has never been subject to sanctions by either the United States or the European Union. He also stated that Indian companies continue to comply with the US-recommended price ceiling of $60.

According to reports in the local press, negotiations are underway between Indian oil companies and their Russian counterparts for the wholesale purchase of oil in September. The companies involved include Indian Oil Corp., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. However, in recent days, Indian refineries have purchased two batches of Russian oil at higher discounts than usual, resulting in the current full utilisation of their capacity.
Overall, the purchase of Russian oil had a positive impact on the stability of the global energy market. In the absence of India's purchase of Russian oil, coinciding with OPEC+ production cuts, global oil prices might have surpassed the March 2022 peak, thereby exacerbating inflationary pressures.

"Decisions are made based on the price of oil in the international market and the global situation at that time," said Indian Foreign Ministry spokesman Randhir Jaiswal when asked whether Indian refineries had stopped buying Russian oil.
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Earlier, reports from Western media alleged that Indian oil refineries had suspended their purchases of Russian oil. US President Donald Trump has threatened to impose new sanctions on Russia and countries buying hydrocarbons from it in the event of no progress in negotiations on a peaceful settlement of the Ukrainian crisis. However, he has also expressed satisfaction at reports of recent progress in these negotiations. "As far as I understand, India will no longer be purchasing oil from Russia. That is what I understand to be the case. I am not in a position to confirm that information," Trump stated the day before.
In July, Trump announced that India would be subject to further sanctions for its procurement of Russian arms and oil. Since the start of the year, however, Russia has become India's largest oil supplier, accounting for about 35% of the country's total oil imports and displacing traditional suppliers from West Asia. The next countries in the sequence are Iraq, Saudi Arabia, the United Arab Emirates, the United States, Nigeria and Kuwait. India is the world's third-largest consumer of crude oil, with an import dependence rate of over 85%. The country's oil suppliers include about 40 countries.

According to industry analysts, India's decision to purchase oil from Russia has contributed to maintaining political stability within the country. However, exploring alternative suppliers from other regions may lead to a price increase.

"India will continue to purchase Russian oil, including through intermediaries. Depending on the seasonal peak, we may be talking about purchasing up to 2 million barrels per day. Only individual refineries may refuse, while others will continue to buy," said Stanislav Mitrakhovich, leading expert at the National Energy Security Fund (NESF) and research fellow at the Financial University under the Government of the Russian Federation.

Furthermore, for India to cease its oil imports from Russia, it is imperative that major hydrocarbon producers such as Saudi Arabia, Iraq and Iran "increase their production" and discontinue internal consultations within OPEC+.

"Theoretically, the Americans could carry out subversive work among OPEC+ members, but this is a task for years to come."
According to the expert, there is a possibility of introducing new sanctions against Russian oil companies, but the US is not as influential as it was 30 years ago to force India, Brazil or China to refuse cooperation with Russia.

"The Americans can offer the Indians the opportunity to purchase oil from the US and the Middle East, but America will not be able to swiftly increase production. Saudi Arabia could hypothetically pursue this course of action, but if it does, it will have to reconsider its recent strategy for working on the international market. Therefore, it seems unlikely that the Arabs will increase production, break OPEC+, and collaborate with America in an attempt to destroy the Russian energy industry," Mitrakhovich added.

In turn, Deputy Director General of the Institute of National Energy Alexander Frolov recalled that in June India purchased 1.5 million barrels per day from Russia, and last month – approximately 1.7 million, and sometimes they reached 2 million. Additionally,

It is challenging to source more economical oil on the market. Consequently, it is more viable to streamline logistics and orchestrate deliveries, for instance, via Singapore.

"The volume of supplies from Saudi Arabia and Iraq is less than from Russia, which provides 35% of all oil imports to India. Therefore, New Delhi can theoretically replace supplies from Russia, but only if it is prepared for Indian oil companies, including private ones, to restructure logistics with unclear goals and results," Frolov explained.
He stated that there is currently no excess supply on the global oil market, and that reports of four Indian refineries allegedly showing no interest in Russian oil for a week cannot be substantiated. "American oil grades are predominantly light and ultra-light. Therefore, if India decides to refuse Russian supplies in favour of American ones, they will have to be mixed with fuel oil or other more viscous grades," the expert added.

Frolov clarified the cessation of Russian oil deliveries to certain Indian refineries, attributing it to the recently imposed sanctions on tankers. He noted that it would require a period of time to address the transportation-related issues. Previous sanctions also led to a certain pause in the purchase of Russian oil.

"A proportion of the tanker fleet is awaiting consultation with the Indian leadership and oilmen regarding the threat of secondary sanctions, as well as with the US. Consequently, a solution will be found on how to redirect oil supplies from Russia in order to avoid secondary sanctions," the speaker reasons.