Why Indian refiners may ditch Russian crude imports soon
What's the story
Indian refiners are considering reducing their imports of Russian crude oil. The move comes as a response to recent US legislation that permits tariffs on nations purchasing Russian oil. Being the world's third-largest buyer of crude, India has been looking for alternative sources, particularly after buying over half of its imports from Russia in recent months.
Market shift
Indian refiners explore alternative sources
In the wake of the new US sanctions, top Indian processors have started exploring alternative sources for crude oil.
The country is looking to reduce Russian crude imports to 20-30% of its total in the near term.
This move would help India shed its position as the top buyer of Moscow's seaborne oil while continuing to negotiate with the US on this issue.
Sanction effects
US law allows tariffs on countries buying Russian crude
The new US law, which was signed last week, allows President Donald Trump to impose tariffs on countries buying Russian crude.
India is one of the economies that could be affected by such measures.
However, replacing Russian cargoes won't be easy as the volume is much larger than those from countries like Venezuela or Iran and market prices are high.
Demand surge
India's oil demand expected to rise
India's oil demand is set to increase with a new refinery in Rajasthan and expansions at existing plants.
This could push purchases toward a record 5.4 million barrels per day.
Talks for Russian crude for November delivery usually start in the last week of this month, putting the next buying cycle squarely inside this uncertainty period.
Purchase strategy
India adjusts Russian oil purchases
India has consistently adjusted its Russian oil purchases over the past year as Washington has tightened or eased pressure on the trade.
However, New Delhi maintains that its purchasing decisions are primarily driven by the need for affordable energy for its 1.4 billion people.
Ajay Srivastava, founder of Global Trade Research Initiative said, "India should continue to buy crude from Russia as long as it is competitive."