After the India-US trade deal, the oil game has completely changed. The special thing is that in the coming days, the supply of Russian oil in India may be half of the current lower level. According to sources related to the purchase in the media report, after US President Donald Trump issued an order detailing some of the terms of the trade deal between the two countries, India’s Russian oil imports may be reduced to almost half of the current lower level. According to these sources, all government and private refineries except Nayara Energy Limited had stopped purchasing any kind of spot cargo after Trump mentioned the agreement in a social media post about a week ago. India has confirmed the trade deal, but has not commented on other details including oil.
Trump’s executive order
He said that after the executive order issued on Friday, the tenure of this pause is likely to be increased, and the average purchase of 12 lakh barrels of oil per day in January will be almost halved. The White House said in the order that India has committed to stop direct or indirect imports of oil from Russia, and if it resumes purchases, tariffs on all Indian goods may be increased. Indian Foreign Ministry spokesperson Randhir Jaiswal said in a statement on Saturday that the country’s energy security is its “top priority” and India will continue efforts to diversify its imports.
No guidelines for refineries
According to sources, Indian refineries spent a tense weekend studying the US order in depth. He also said that he has not yet received any direction from New Delhi and there is no hope of getting it in the near future. The enthusiasm for discounted oil has left oil processors in a difficult political situation, facing increasingly aggressive demands from Washington, which has linked these purchases to broader trade agreements. The South Asian country, which bought almost no Russian crude from Moscow before its invasion of Ukraine in early 2022, has now become the world’s largest oil importer.
How much Russian oil did India buy daily in January?
The US increased its pressure in October by imposing sanctions on Russian producers Rosneft PJSC and Lukoil PJSC. Purchases of 1.2 million barrels per day in January are well below a peak of about 2 million barrels per day in 2024, according to Kpler data. According to the information, Rosneft’s Naira will probably continue to buy about 400,000 barrels of Russian oil per day, as the company is unable to get crude from any other producer due to sanctions. However, it is not clear whether Naira has received any exemption or permission from Washington and New Delhi to continue purchases.
How much can the supply remain?
Vandana Hari, founder of Singapore-based consultancy firm Vanda Insights, said in an ET report that after the completion of the agreement process, Indian imports are likely to stabilize around 400,000 to 500,000 barrels per day. He said that the overall economic benefit of the trade agreement with America will be much more than the benefit of subsidized import of crude oil. According to sources, the purchase of Russian oil by Indian Oil Corporation, Bharat Petroleum Corporation and Reliance Industries Limited is now highly uncertain. He said that all three refiners will take delivery of already booked cargo, but have stopped placing new orders.