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India halts purchase of Russian oil amid Western sanctions

India halts purchase of Russian oil amid Western sanctions Illustrative photo (Photo: Getty Images)
Author: Daria Shekina

Some Russian crude oil shipments are stranded in Indian ports due to the price standoff set by Western countries, according to India's Minister of Petroleum and Natural Gas, Hardeep Singh Puri.

"In the Russian case, it is a question of price cap and it is also a question of some of their shipping entities coming under adverse notice of others," he has said.

He also has added that when Russian prices don't fit, India buys oil from Iraq, the UAE, and Saudi Arabia.

Oil imports to India from Russia have declined due to sanctions

Last month, the U.S. tightened compliance with the price cap by imposing sanctions on several traders of Russian oil. The price limit is intended to restrict Russia's oil export revenues, depriving it of funds for the war in Ukraine while ensuring a stable global economic supply.

India's oil imports from Russia surged after the war began, as Moscow offered significant discounts. However, shipments dropped in December to the lowest level since January of the previous year after the sanctions intensified. Some oil tankers delayed deliveries, turned around 180 degrees, or turned off transponders after failing to deliver oil to Indian ports.

India wants to buy cheap oil

The minister has noted that the country buys oil at the point of delivery. According to him, if the country cannot secure supply due to sanctions imposed by other countries, India will not buy it.

Puri also adds that India, the world's third-largest oil consumer, depends on foreign supplies, covering 85% of its demand.

Sanctions impact

Western sanctions have led to half of Russian oil and oil product exports in 2023 going to China, while India's share has grown to 40% in two years. Europe's share in Russia's oil exports has dropped roughly tenfold, from approximately 40-45% to 4-5%.

Oil flows from Russia faced problems after the U.S. tightened sanctions against traders and shipping companies. Signs appeared just a few weeks after the U.S. Department of the Treasury imposed the most extensive sanctions against Russian oil traders and the state shipping company Sovcomflot since the beginning of the war in Ukraine.

Recently, Reuters reported that additional measures implemented by the United States to control the ceiling on Russian oil had lowered the price that Russia could receive for its oil in global markets, reducing Kremlin revenues for the war with Ukraine.