Why India's state-owned refiners have stopped buying Russian oil
What's the story
India's leading state-owned oil companies have stopped buying Russian crude in the past week or so. The step comes as discounts on Russian oil have shrunk and US President Donald Trump has threatened tariffs on countries still importing from Russia. Major players like Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) are now looking at the Middle East and West Africa to keep their refineries running.
Strategy change
Shift in sourcing
The four state refiners, IOC, BPCL, Hindustan Petroleum Corporation (HPCL), and Mangalore Refinery Petrochemical Limited (MRPL), have not sought Russian crude in the past week or so. They usually purchase Russian oil on a delivered basis but are now looking at spot markets for replacement supplies. These mostly comprise Middle Eastern grades such as Abu Dhabi's Murban crude and West African oil, industry sources told Reuters.
Ongoing imports
Private players continue to buy Russian oil
Despite the shift among state refiners, private companies Reliance Industries and Nayara Energy continue to be India's biggest buyers of Russian oil. However, it's important to note that state refiners account for over 60% of India's total refining capacity of 5.2 million barrels per day. This means their decision to halt purchases could have a significant impact on India's overall import strategy.
Tariff impact
Trump's tariff threat adds pressure
On July 14, Trump had threatened 100% tariffs on countries buying Russian oil unless Moscow reaches a peace deal with Ukraine. The threat has further complicated the situation for Indian refiners, prompting them to explore alternative sources of crude oil.