“It has been our constant precedence to safeguard the pursuits of the Indian client in a risky vitality state of affairs. Our import insurance policies are guided fully by this goal,” the MEA mentioned in its first response to Trump's claims early on Thursday.
“The present (US) administration has proven curiosity in deepening vitality cooperation with India,” it added. By night, the MEA categorically denied that any Modi-Trump dialog on Russian oil purchases had taken place.
ET BureauSuch choices solely pushed by client wants; US eager on boosting vitality ties with New Delhi: MEA
Indian refinery executives advised ET they haven't obtained any authorities directive to halt Russian crude imports. Trump advised reporters on Wednesday he obtained assurances from Modi as a part of his administration's broader push to chop off Moscow's vitality funding. India can't “instantly” halt oil shipments, “however the course of goes to be over with quickly,” he mentioned. A phased withdrawal from shopping for Russian crude over the subsequent 2-3 months is unlikely to roil international oil markets, with costs prone to rise solely $2-3 a barrel, refinery executives cited above mentioned.
Nonetheless, such a transfer would squeeze home refiners as they lose Russian reductions of round $2 a barrel and pay extra for substitute provides, they famous.Non-public refiners could be hit tougher if they've to modify away from Russian oil. Sanctions-hit Nayara Vitality, which is totally depending on Russian crude, could battle to take care of operations, whereas Reliance Industries, which sources about half its crude from Russia, will face larger procurement prices, executives mentioned. State-run refiners have already slashed the share of Russian crude to about 20% of their consumption, diversifying provides.
General, Russian oil accounts for about one-third of India's crude imports — and India, in flip, takes almost one-third of Russia's complete crude exports. On Wednesday, Nayara was sanctioned by the UK in an effort to limit Russian oil commerce. “Famous… We don't subscribe to unilateral sanctions. Indian corporations supply vitality provides from internationally… There needs to be no double requirements,” the MEA mentioned in response to the UK's sanctions on Nayara.
TAPPING SPOT MARKET
If Indian refiners are compelled to switch Russian barrels, they plan to faucet the spot marketplace for provides from the US, UAE and Brazil, the place cargoes can be found.
International provide is at the moment ample, with near-record volumes floating at sea, however not sufficient to immediately change India's 1.5 million barrels per day (mb/d) of Russian imports, a refinery govt mentioned. A phased substitute could be preferable, as a sudden surge in spot demand might drive costs up by $7-8 a barrel, he mentioned.
A key query, executives mentioned, is whether or not Russia can rapidly discover new patrons for the volumes vacated by India. “No nation, besides China, could wish to go in opposition to the US,” one in every of them mentioned. China stays the most important purchaser of Russian crude, adopted by India and Türkiye.
India's exit would doubtless deepen reductions on Russian oil, encouraging China to extend purchases, although its capability to soak up all of India's share is restricted by current long-term contracts within the Center East, one other govt mentioned. These time period contracts usually run on a financial-year foundation, making mid-year modifications unlikely.
SLOWER DEMAND GROWTH
If Russia fails to search out fast patrons for the oil India stops taking, the market might tighten and costs could surge $7-8 a barrel, the manager mentioned. Nonetheless, such a spike could also be shortlived as larger costs would spur elevated output from US shale producers, Brazil, and even some OPEC+ members exceeding their quotas.
