Cutting Russian oil purchases helped New Delhi avoid 25% tariffs and clinch an interim trade deal with the US.
A crude oil tanker sails in Nakhodka Bay near the port city of Nakhodka, Russia, December 4, 2022. REUTERS/Tatiana Meel/File Photo
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A crude oil tanker sails in Nakhodka Bay near the port city of Nakhodka, Russia, December 4, 2022. REUTERS/Tatiana Meel/File Photo
Indian refiners are buying millions of barrels of prompt Russian crude oil cargoes as the South Asian nation seeks to navigate an oil supply crunch triggered by the Middle East conflict, six sources familiar with the matter said.
After months of Washington pressuring New Delhi to avoid buying Russian barrels in an effort to reduce money flowing to Moscow’s war effort in Ukraine, the US Treasury Department issued a 30-day waiver on Thursday allowing India to buy Russian oil currently stuck at sea.
“To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil,” Treasury Secretary Scott Bessent said.
“This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea,” he said in a statement.
He called it a stopgap measure, as Washington expects India to eventually buy more US oil.
India is vulnerable to energy supply shocks, with crude stocks covering only about 25 days of demand. India gets about 40% of its oil imports from the Middle East through the Strait of Hormuz.
India was the top buyer of Russian seaborne crude after Moscow’s 2022 Ukraine invasion, but in January, its refiners started to reduce purchases under pressure from Washington.
Cutting Russian oil purchases helped New Delhi avoid 25% tariffs and clinch an interim trade deal with the US.
It is unclear whether the United States has allowed India to increase Russian purchases to offset potential Middle Eastern supply losses.
A source directly involved with the matter said India had approached US President Donald Trump’s administration seeking approval to buy Russian crude imports due to the Iran conflict.
India’s oil and foreign ministries did not respond to Reuters emails seeking comments. The White House and the US Treasury Department did not immediately respond to requests for comment.
State refiners Indian Oil Corp (IOC.NS), Bharat Petroleum Corp (BPCL.NS), Hindustan Petroleum Corp (HPCL.NS), and Mangalore Refinery and Petrochemicals Ltd (MRPL.NS), are talking to traders for prompt delivery of Russian cargoes, according to the Reuters sources.
One of the sources said Indian state refiners have bought about 20 million barrels of Russian oil from traders so far.
HPCL and MRPL last received Russian oil in November, according to data obtained from industry sources.
The traders are selling Russian Urals to India at a premium of $4-$5 per barrel to Brent on a delivered basis for arrival at Indian ports in March and early April, three of the sources said.
This is in contrast to a discount of about $13 per barrel for cargoes traded in February, traders said.
HPCL had bought two cargoes of Russian oil at a $13 discount before the war started on February 28.
“India refiners are back in the market … nowadays more than prices, availability of molecules is the issue,” said one of the traders involved in Russian oil sales to India.
This source said Reliance Industries (RELI.NS), also approached his company for the purchase of prompt Russian oil cargoes.
Refiners in India had already started tapping Russian oil aboard vessels floating off the country’s coast to make up for the loss of Middle Eastern crude, two sources with direct knowledge of the matter said earlier in the day.
Indian refiners did not immediately respond to Reuters emails sent out after business hours.