Following the trade deal announced by U.S. President Donald Trump, Indian refiners seek clarification about Russian oil imports from their government, with some pre-emptively halting purchases, sources with knowledge of the matter told Bloomberg on Tuesday.
President 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.
India, the world’s third-largest crude oil importer, dramatically raised its imports of cheap Russian crude following Moscow’s invasion of Ukraine in early 2022.
For nearly four years, India imported so much Russian crude that Russia became its single biggest oil supplier accounting for about a third of all imported crude.
However, Indian refiners have recently scaled down purchases of Russian crude following the U.S. sanctions on Russia’s oil giants Rosneft and Lukoil.
Indian refiners have halted imports from the now-sanctioned entities and turned to non-sanctioned Russian supply and alternative cargoes from the Middle East, the Americas, and, to a lesser extent, West Africa, arbitrage permitting.
Supply from Russia could further drop, as per the trade deal with the United States that limits Indian imports of Russian crude.
Since news of the deal broke, at least three Indian refiners have asked the Indian authorities for guidance on how to proceed with Russian purchases, if at all. Two of these refiners have temporarily stopped procuring oil from Russia, according to Bloomberg’s sources.
Moody’s warned today that an immediate suspension of crude oil imports from Russia on the part of India would present a major disruption for global oil markets.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com