Increased oil prices could reach $200 amid India's potential halting of Russian oil purchases, while the EU persists in significant imports, according to sources.
In the face of global market volatility, India has maintained its strategic approach to energy sourcing, continuing to purchase significant quantities of crude oil from Russia. This policy, unchanged despite US threats of financial penalties, is driven by India's national interest in securing affordable energy and maintaining global energy stability.
As reported by Reuters on July 31st, there were initial claims that Indian public sector refiners had suspended purchases of Russian oil. However, these reports have since been rebutted, with Indian sources clarifying that Indian refiners have continued to buy Russian crude based on commercial viability.
Russian oil, not sanctioned by the United States or the European Union, has become a crucial source for India. In July 2024, Russia supplied more than 2 million barrels per day (bpd) to India, making it the largest crude oil source for India, compared to Iraq's 20% share.
Indian oil refiners' buying decisions depend on factors like price, crude quality, inventories, and logistics. India complies with international regulations while sourcing from Russia. This pragmatic approach has kept oil flowing, prices stable, and markets balanced.
The continued purchases have helped India secure energy at lower cost amid global market volatility triggered by earlier disruptions due to sanctions on Russia. Russian oil exports to India surged dramatically after European sanctions in 2022, increasing by 2,200%, reflecting a major shift in trade flows.
India's role as the world's third-largest energy consumer and its import strategies contribute to global energy market stability by balancing supply and demand dynamics. The European Union, the largest importer of Russian-origin liquefied natural gas (LNG), buys 51% of Russia's LNG exports.
Russia, the world's second-largest crude oil producer, with an output of about 9.5 million barrels per day, nearly 10% of global demand, also benefits from India's continued purchases. For pipeline gas, the EU remains the top buyer with a 37% share.
Indian oil marketing companies (OMCs) have refrained from buying Iranian or Venezuelan crude, which is sanctioned by the US. However, they have complied with the $60 per barrel price cap recommended for Russian oil by the US. The European Union has recently recommended a lower price cap of $47.6 per barrel for Russian oil, to take effect in September.
In a recent development, the United States President Donald Trump previously claimed that India may cease purchasing Russian oil. However, India has defended its sovereign right to pursue an energy policy in its own national interest.
In conclusion, India's strategic approach to energy sourcing, guided by its national interest and commercial terms, has proven beneficial for both India and the global energy market. By continuing to purchase Russian oil, India is helping to maintain global energy stability while securing affordable energy for itself.
- Despite global market volatility and US threats, India's national interest in securing affordable energy has led it to maintain its policy of purchasing significant quantities of crude oil from Russia.
- Russian oil, not sanctioned by the US or EU, has become a crucial source for India, with Russia supplying more than 2 million barrels per day to India in July 2024.
- Indian oil refiners' buying decisions are influenced by factors like price, crude quality, inventories, and logistics, and India complies with international regulations while sourcing from Russia.
- The continued purchases have helped India secure energy at lower cost amid global market volatility, with Russian oil exports to India surging dramatically after EU sanctions in 2022.
- India's role as the world's third-largest energy consumer and its import strategies contribute to global energy market stability, as the European Union, the largest importer of Russian-origin liquefied natural gas, buys 51% of Russia's LNG exports.
- Russia, the world's second-largest crude oil producer, also benefits from India's continued purchases, with the EU remaining the top buyer for pipeline gas.
- Indian oil marketing companies have complied with the $60 per barrel price cap recommended for Russian oil by the US, but have refrained from buying Iranian or Venezuelan crude, which is sanctioned by the US.
