India is likely to begin scaling back its crude oil purchases from Russia under an agreement reached with the United States in exchange for lower trade tariffs, sources said, adding that these imports will continue for now, as refiners like Nayara Energy have limited alternatives.
President Donald Trump on Friday signed an executive order rescinding a punitive 25 per cent duty on all imports from India, saying the move followed New Delhi’s commitment to stop imports of Russian oil.
While Indian refiners, which process crude oil into fuels such as petrol and diesel, have not received any formal directive to halt Russian purchases, they have been informally advised to begin scaling back buys from Moscow, three sources with knowledge of the matter said.
Most refiners will continue to honour purchase commitments made before the announcement – orders typically placed six to eight weeks in advance – but will not place new orders thereafter, they said.
Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL) and HPCL-Mittal Energy Ltd (HMEL) had stopped buying oil from Russia soon after the US last year slapped sanctions on Moscow’s key exporters, while others like Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL) will wind down their purchases, sources said.
Reliance Industries Ltd, India’s biggest buyer, which late last year paused purchases after US sanctions on Rosneft and Lukoil, is also likely to cease purchases after its resumption cargo of 1,50,000 barrels is delivered in the next couple of weeks.
The only exception to this rule is likely to be Nayara Energy. Nayara was first sanctioned by the European Union and then by the UK for its Russian links (Rosneft holds 49.13 per cent in Nayara). Because of these sanctions, no other major supplier is willing to do any commercial transaction with the company, resulting in it being forced to buy Russian oil from non-sanctioned entities.
While the Oil Ministry has refused to comment on the issue, the Commerce Ministry and the Ministry of External Affairs have not directly commented on commitments made by India with regard to Russian oil purchases.