India’s Russian Oil Dilemma Threatens to Shake Global Markets
The immediate suspension of crude oil imports from Russia on the part of India would present a major disruption for global oil markets, Moody’s warned today, following the announcement of a trade deal between New Delhi and Washington.
“Even though India has reduced its purchase of crude oil from Russia in recent months, it is unlikely to cease all purchases immediately which could be disruptive to India’s economic growth,” the ratings agency said in a note, as quoted by the Economic Times.
President Donald Trump broke the news of a deal with India on Monday, saying the U.S. would reduce tariffs on Indian imports in exchange for a commitment on the part of New Delhi to stop buying crude oil from Russia and boost purchases of American oil instead, along with other goods and commodities.
The deal would also grant Indian energy buyers access to Venezuelan crude and maybe even Iranian crude, as suggested by the U.S. president, providing alternatives to Russian crude, which turned the country into India’s single biggest supplier of the commodity over the past four years. Since U.S. sanctions on the two biggest Russian companies shipping crude abroad came into effect last November, however, Indian refiners have been reducing their intake and looking for alternatives.
This month, India is on track to import record-high volumes of crude oil and condensate as refiners boost non-Russian purchases further to replace barrels lost to U.S. sanctions, energy flow tracking firm Vortexa said in a report last week.
India’s crude and condensate imports will likely hit 5.2 million barrels per day (bpd) this month—a new record, as deliveries of cargoes laden with non-Russian oil surged. The jump in non-Russian crude imports is set to more than offset the decline in India’s imports of Russian crude, according to Vortexa.
By Irina Slav for Oilprice.com
U.S.-India Trade Deal Puts Oil and Russian Crude at the Core
President Donald Trump said on Monday that the United States and India have reached an agreement on a trade framework that cuts U.S. tariffs on Indian goods and commits New Delhi to expand purchases of U.S. oil and gas, pushing energy supply to the center of talks that have unfolded largely in public.
Trump’s comments outlined a deal that lowers U.S. tariffs on Indian imports to 18% and removes an additional duty tied to India’s Russian oil buying. In return, he said Prime Minister Narendra Modi agreed to sharply reduce purchases of Russian crude and shift toward U.S. supply, alongside broader commitments to buy American energy, technology, and agricultural products. Indian officials have not yet confirmed the details or timelines.
The focus on oil reflects India’s role as one of the largest buyers of Russian crude since 2022, a trade that has reshaped tanker flows and underpinned refinery margins. Washington has increasingly treated that relationship as a political issue rather than a purely commercial one, using trade pressure to push New Delhi toward alternative sourcing.
Trump also said India would be allowed to buy oil from Venezuela, presenting it as a substitute for Russian and Iranian barrels. The remark suggested potential flexibility on sanctions enforcement, though no formal policy change has been announced. Venezuela remains under U.S. sanctions, with oil exports governed by limited licenses, and it remains unclear whether any India-specific authorization has been granted or whether the comment reflected negotiating posture.
The timing is notable. India’s crude imports are running near record levels, with January volumes set to be the highest on record as refiners respond to strong domestic demand and export fuel, according to Oilprice.com. Russian grades continue to dominate incremental supply because of price, while U.S. crude has struggled to compete without discounts or logistical incentives.
Liquefied natural gas is also included in the trade framework. India remains short of natural gas and exposed to volatile spot LNG prices as it continues to seek lower-cost, long-term supply contracts. U.S. exporters see India’s growing power demand as a potential outlet, but pricing terms have yet to be agreed.
By Charles Kennedy for Oilprice.com
No comments:
Post a Comment