Amid the Russia-Ukraine crisis, there has been a significant increase in oil prices, posing a huge challenge to India, which relies on imports, which account for nearly 85 percent of its crude oil needs.

New Delhi, Amid the Russia-Ukraine crisis, there has been a significant increase in oil prices, posing a huge challenge to India, which is dependent on imports, which accounts for nearly 85 percent of its crude oil needs – meaning 5 million barrels per day .

The West and European countries have imposed sanctions on Russia. While Europe said it will gradually move away from its reliance on Russian oil, the US announced it will ban imports of Russian oil, liquefied natural gas (LNG) and coal. Recently, the West and Europe have expressed concerns about India’s purchase of discounted oil from that country.

Arm turning India

Sources in New Delhi told Financial Express Online on Friday (March 18, 2022) “India’s legitimate energy transactions must be politicized. Countries that import oil from Russia themselves cannot credibly argue for restrictive trade. Also those countries with oil self-sufficiency.”

How much does India import from Russia?

“For India, it was only a marginal supplier of crude oil, which is less than 1 percent of India’s needs. There is no government to regulate imports from that country that is not even in the top 10 sources,” explains the source quoted above.

High-ranking sources told Financial Express Online that much of this requirement is met by countries in Western Asia, including: Iraq 23 percent, then Saudi Arabia 18 percent, and UAE 11 percent.

From the USA

For India, as previously reported, the US has now become a major source of crude oil for India and about 7.3 percent is imported from there and is expected to increase significantly in the current year. It will increase by about 11 percent and its market share in India will be 8 percent.

Geopolitical developments

The global situation poses a huge challenge to India’s energy security and it has explored other markets to expand its needs. In fact, Iran was the second largest supplier of crude oil after Saudi Arabia until 2010-11, due to sanctions imposed by the West, and India was forced to shut down all taps. However, when sanctions eased somewhat in 2015, India’s refineries had sourced more from Iran.

India was also forced to stop buying from the South American nation of Venezuela in 2019, when the West imposed unilateral sanctions in 2017 — by former US President Donald Trump. The sanctions were imposed to oust President Nicolas Maduro.

The West has imposed sanctions on both Iran and Venezuela that are unilateral in nature. Now with the ban on oil imports from Russia, the West has returned to talks with Venezuela and Iran about the possibility of buying oil from them. According to reports, top US officials were recently in Caracas and met with that country’s top leaders, similarly, top officials in Tehran are renegotiating the nuclear deal.

Alternative Resources

With a war raging and other sources of energy being found, India is forced to pay higher costs. “The focus is now on competitive energy sources and we welcome such offers from producers,” explained the source, adding: “Traders from India operating in the global energy markets are exploring the best options available.”

Which countries buy Russian oil?

According to sources, Russian oil and gas is bought by several countries around the world, especially to European countries.

As previously reported in Financial Express Online, nearly 75 percent of Russia’s total natural gas exports go to OECD Europe – countries such as Italy, France and Germany. Other European countries such as Poland, Finland, Romania, the Netherlands and Lithuania are among the major importers of Russian crude oil.

Recently, Russian Deputy Prime Minister Alexander Novak had invited Indian investments into Russia’s oil and gas sector when he had a telephone conversation with the Minister of Petroleum and Natural Gas, Hardeep Singh Puri. Reports later came that Indian Oil Corporation had purchased nearly 3 million barrels of crude oil from Russia at a discounted price.

The sanctions imposed by the West in the wake of Russia’s military operations in Ukraine explained that they “avoid any impact on energy imports from Russia”. And the Russian banks, which are the main payment channels from the European Union for Russian energy imports, are not excluded from SWIFT.

From Latin America

Financial Express Online previously reported that oil imports from Colombia and Ecuador are expected to increase significantly and plans to increase crude oil imports from the region by nearly 50 percent in the coming years.

This post India’s legitimate energy transactions should not be politicized: Sources

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