New Delhi: India's acquisition of crude oil from Russia has seen a significant surge since the onset of the Russia-Ukraine conflict. Previously, Russia's contribution to India's total crude imports stood at less than 1 percent. However, in 2023, it is projected to hold the largest share, reaching 30 percent, surpassing traditional suppliers like Iraq and Saudi Arabia. Notably, in July of the previous year, a substantial 40 percent of India's total crude oil imports originated from Russia.
Despite a temporary dip in February this year, with Russian imports declining to around 25 percent, speculation arose regarding India bowing to American pressure to curtail purchases from Russia. However, the Indian government has firmly refuted such claims, asserting its commitment to maintaining regular crude oil procurement from Russia. India has reiterated to the United States that its energy security necessitates the freedom to source oil from any nation as per its requirements.
India clarified that the decrease in imports from Russia was not due to external pressure but rather a result of diversification in procurement patterns. Over recent years, India has expanded its crude oil supplier base, signing agreements with numerous new countries, totaling 39. Consequently, India no longer relies heavily on a select few nations for its crude oil needs. Additionally, the United States has adjusted its stance considering the geopolitical dynamics in the Gulf region and the Red Sea. While initially implying pressure on India to cease Russian oil imports, the US has clarified that it has not imposed any ban on India's procurement from Russia.
Addressing concerns over the unlimited intake of Russian crude, the US has delineated its stance. It contends that if Indian refineries process Russian crude into petroleum products, these products should not be classified as Russian. In practice, European nations purchase the refined petroleum products originating from Indian-refined Russian crude. Nevertheless, the US emphasizes the importance of adhering to international rules governing crude oil prices and urges moderation in Russian crude procurement. The Group of Seven (G7) countries have set price bands for purchasing oil from Russia to regulate global oil prices, ensuring stability and averting inflationary pressures worldwide.
Eric Van Nostrand, the US Deputy Finance Minister, clarified during his visit to India that these restrictions do not extend to products derived from refined Russian crude. He clarified that post-refinement, Russian oil loses its original classification. Therefore, exports of products manufactured from refined Russian crude will not be categorized as Russian crude imports.
While the US has not explicitly directed India to diminish its Russian oil imports, it emphasizes the objective behind sanctions imposed on Russia and the G7 price ceiling of $60 per barrel. The intention is to curtail Russia's profit margins from crude sales and maintain global oil supply equilibrium. Following Russia's invasion of Ukraine in February 2022, Western nations imposed various sanctions, including limited crude purchases and price caps. However, India has emerged as the foremost importer of Russian crude oil since then, navigating through the complex geopolitical landscape while addressing its energy needs.
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