Livemint | Explained: Can India join western countries to cap Russian oil?

Sep 07,2022

Amid the rise in global crude oil prices and Western pressure, India had been importing crude oil from Russia. Considering Russian President Vladimir Putin saying it will stop delivering oil and gas supplies to countries that introduce price caps, things may not be that hard for India specifically.

Recently, the European Union has also called on India and China to take part in the G-7 initiative to reduce the profits that Russia makes from selling oil. Though it is still not clear how the G-7 will implement its price-capping plan.

On September 2, the Group of Seven wealthy nations (G7 countries) agreed on a plan to implement a price-capping mechanism on Russian oil exports. In the proposal, the finance ministers representing the G-7 nations sought to curtail Russia's ability to fund its war in Ukraine.

The G7 statement added that the price cap’s effectiveness and impact would be closely monitored and revisited as necessary, reported CNBC. The G-7 is comprised of the US, Canada, France, Germany, Italy, UK and Japan.

Responding on the query if India would sign sign up to the G-7 proposal to put a price cap on Russian oil, Indian Petroleum and Natural Gas Minister Hardeep Singh Puri said, "Now, what will the proposal mean? We will look at it very carefully."

Earlier on 6 September, Puri, said most of his country's crude oil supplies in the near future will come from the Gulf countries.

Though between April to May this year, India's imports from Russian oil rose by 4.7 times, or more than 400,000 barrels per day, however, it fell in July.

After Saudi Arabia lowered the official selling price in June and July compared with May, the crude oil imports rose in July by more than 25%. With this, Saudi Arabia stayed at the No. 3 spot among India's suppliers.

With sanctions were imposed by Western companies against Moscow for what it calls a 'special military operation' in Ukraine, Indian refiners have been snapping up relatively cheap Russian oil.

Despite, India's oil imports declined by 7.3% in July from the June levels, Moscow remained the country's second biggest oil supplier after Iraq.

With all being said, Putin on 7 September made it clear that it is not using energy as a "weapon" against Western nations. The clarification from the president has come days after Russia had halted natural gas deliveries via Nord Stream 1, which is a 1,222 km long key pipeline to Europe.

"They say that Russia uses energy as a weapon. More nonsense! What weapon do we use? We supply as much as required according to requests from importers," Vladimir Putin told the Eastern Economic Forum in the Pacific port city of Vladivostok.

ALSO READ: Russia not using energy as 'weapon' against Europe, says Vladimir Putin

On the issue of if India will still continue purchases of Russian oil in future, Hardeep Singh Puri said he would not rule out whether the imports will rise or fall. "When prices are high, the logistical factors are applied. We have a duty to our consumers," he had said.

Responding back on the query of moral responsibility, Puri firmly said that India will continue to buy from Russia or wherever.

"I said the Europeans buy more in one afternoon than I do in a quarter. I’d be surprised if that is not the condition still. But yes we will buy from Russia, we will buy from wherever," Puri said.

On the conflict issue, Puri replied, “No, there’s no conflict. I have a moral duty to my consumer. Do I as a democratically elected government want a situation where the petrol pump runs dry? Look at what is happening in countries around India."

So looking deep into if India will continue its oil imports from Russia, the answer is probably a big yes, however, the quantity will depend on the global crude oil prices and not Western sanctions on Russia post Ukraine invasion.