Late last month, US President Donald Trump announced a 25 percent tariff on Indian exports to the United States, along with an unspecified penalty for purchasing oil and arms from Russia.
Russian oil makes up 35-40 per cent of the country's crude intake, helping reduce overall energy import costs, keep retail fuel prices in check, and contain inflation.
Narendra Taneja, Energy expert, says Russia exports 5 million barrels of oil every day to the global oil supply system and if Russian oil is forced out of this system, fuel prices would shoot up.
"For us in India, if the prices go up in America, it will have an impact on many other things, including our economy and the global economy at large. But as far as our oil supplies for domestic consumption are concerned, we don't need to worry about it. We import crude oil from 40 different countries including America, Middle East, Africa, Latin America, South East Asia, Brunei and many other countries. We are not worried about there being a disruption of supply to India," Taneja told PTI Videos.
According to analysts, India's annual oil import bill could rise by 9 to 11 billion dollars if the country is forced to slash its purchases of Russian crude. This would impact major Indian crude refiners, as they would be forced to buy more expensive oil from the Middle East or other places, affecting their profit margins, while also raising the spectre of inflation for Indian consumers.
"It's up to the companies – the government companies or the private companies to get oil from wherever they can. Indian companies have been importing oil from Russia for no love of Russia. They have been importing oil from Russia, because Russia has been offering a good discount. This is all about the economics of oil. It's not the government which tells the companies to import from Russia. These decisions are taken by different companies, whether government sector companies or private sector companies. They take the call," he said.
Switching suppliers of crude will also involve complex logistical, economic and geopolitical considerations. Discounted Russian crude also enabled India to refine the oil and export petroleum products, including to countries that have banned direct imports from Russia. This helped Indian oil companies post record profits.
