India has yet to issue guidance to oil refiners, preventing them from purchasing Russian crude oil.
India's oil import landscape is undergoing a potential shift as the decline in Russian crude oil imports could boost demand for Very Large Crude Carriers (VLCCs). This change comes amidst a complex web of geopolitical pressures and commercial decisions.
Despite US pressure and potential penalties, India has continued to buy substantial quantities of Russian oil. In recent years, India's oil purchases from Russia have significantly increased, growing nearly 19-fold from 0.1 million barrels a day in 2021 to 1.9 million barrels a day in 2024 [1].
However, last week, refiners in India were told to prepare plans for buying non-Russian crude, following Trump's return to office. As a result, India's US crude oil imports surged 51%, according to sources. Notably, the state-owned Indian Oil Corp. purchased at least 5 million barrels of US crude oil and 2 million barrels from Abu Dhabi last week, marking larger and for relatively immediate delivery compared to usual standards.
India's close ties with Russia, as maintained by Prime Minister Narendra Modi and Russian President Vladimir Putin, have been a point of contention for the US. Trump has blasted India for continuing to purchase military equipment and energy from Russia, and even threatened additional penalties for its close ties with Moscow.
However, no decision has been made regarding the stopping of imports from Russia. The government has only asked state-owned processors to prepare an outline of where alternate barrels can be sourced. This indicates that India may continue buying Russian crude despite potential penalties from Trump.
Trump claimed he "heard" India would no longer be buying oil from Russia, calling it "a good step." However, India has not been instructed to stop buying Russian oil by its government.
In the midst of these geopolitical tensions, it's important to note that crude purchases in India are commercial decisions made by the refiners themselves. This independence allows India to navigate its oil import needs based on market conditions and diplomatic pressures.
Looking ahead, Putin is scheduled to visit India later this year, which could provide an opportunity for further discussions on India's oil import policies and the broader strategic relationship between the two nations.
- India's shift in oil import landscape, resulting from a decrease in Russian crude oil imports, could lead to an increase in demand for Very Large Crude Carriers (VLCCs) in the economy.
- Despite US pressure and potential penalties, India has substantially increased its oil purchases from Russia in recent years, showcasing the country's close ties with Russia.
- Following Trump's return to office, India's US crude oil imports surged 51%, as refiners were told to prepare plans for buying non-Russian crude.
- In order to source alternate barrels, state-owned Indian processors have been asked to prepare an outline, suggesting that India may continue buying Russian crude despite potential penalties from Trump.
- The independence of crude purchases in India allows the nation to navigate its oil import needs based on market conditions and diplomatic pressures, making it a crucial player in the global energy trade and finance industry.
- Putin's upcoming visit to India later this year could provide an opportunity for further discussions on oil import policies and the broader strategic relationship between the two countries.
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