India's oil imports from Russia likely to increase in September despite US tariffs

  

 

 

India's oil imports from Russia likely to increase in September despite US tariffs

India's Russian oil imports are likely to increase in September, as New Delhi continues to buy Russian oil despite the imposition of a 50% tariff by the United States.

According to the British news agency Reuters, India has become the largest buyer of Russian oil these days, as Western sanctions after Russia's invasion of Ukraine in 2022 diverted supplies of Russian oil from other markets. This situation gave Indian refineries the opportunity to buy cheap crude oil.

However, these purchases have been criticized by the government of US President Donald Trump. The United States has imposed tariffs of up to 50% on Indian products on oil purchases from Russia.

New Delhi says it is trying to resolve Trump's additional tariffs through talks, but Prime Minister Narendra Modi has also embarked on a series of diplomatic trips to other countries, including a meeting with Russian President Vladimir Putin.

US officials have accused India of "taking advantage" of cheap Russian oil, while Indian officials have accused the West of adopting double standards, as the European Union and the United States still buy billions of dollars of Russian products.

French bank BNP Paribas said in a note that "the tariffs are part of broader trade talks between India and the United States, and as domestic refinery output in India is increasing due to Russian oil subsidies, we do not expect India to significantly reduce its Russian imports."

The Indian oil ministry declined to comment on the matter on Thursday.

If India does not buy Russian oil, it will be difficult for Moscow to maintain current export levels, and this will reduce the Russian government's revenue, which is a key source of financing the Ukraine war.

Three sources involved in the oil trade said that Indian refiners plan to increase Russian oil purchases in September by 10-20% from August levels, an increase of 1.5 to 3 million barrels per day.

Reliance and Nayara Energy, the two largest buyers of Russian oil, also declined to comment.

Russia has more oil to export next month as planned and unplanned refinery shutdowns have limited its ability to convert crude into fuel. Ukraine has recently attacked 10 Russian refineries, knocking out 17% of the country’s refining capacity.

India imported 1.5 million barrels of Russian crude per day in the first 20 days of August, the same as in July but slightly below the January-June average of 1.6 million barrels per day.

This amount accounts for about 1.5% of global supplies, making India the largest buyer of Russian crude by sea, meeting about 40% of India’s oil needs. China and Turkey are also major buyers of Russian oil.

Will India continue to buy Russian oil?

According to three traders, Russian exporters priced Urals crude oil for September at a $2 to $3 per barrel discount to Brent, which is more than the August discount ($1.50).

“Unless India makes a clear policy change or there is a major shift in trade conditions, Russian crude will continue to be the mainstay of its supply,” says Kepler’s Samit Ritulia.

Brokerage firm CLSA also said that India’s chances of stopping buying Russian oil are “very limited” unless there is a global embargo.

The firm added that if India were to stop importing Russian oil, global supply could fall by about 1 million barrels per day, pushing global prices to around $100 per barrel.