India could significantly reduce imports of Russian crude oil if the United States allows purchases of Iranian and Venezuelan oil, Indian officials have told the U.S. Administration this week, a source familiar with the talks told Bloomberg on Thursday.
Since the Russian invasion of Ukraine, India has relied on the discounted Russian crude banned in the West, to reduce its crude import bill. Indian refiners have significantly increased their purchases of Russian crude, making India the second-largest buyer of Russia’s oil, behind only China.
However, the Trump Administration, facing difficult trade negotiations with India and the dragging war in Ukraine, has singled out India as a culprit for buying Russian oil.
Indian officials have repeatedly said the country would continue to buy the cheap Russian oil. Officials are now telling the Trump Administration’s officials that India could cut crude imports from Russia if the U.S. were to allow flows from Iran and Venezuela.
Indian officials have informed U.S. representatives that cutting off all three sanctioned suppliers simultaneously – Russia, Venezuela, and Iran – could lead to a hike in international oil prices, according to Bloomberg sources with knowledge of the talks.
The Trump Administration has been signaling since January it doesn’t want to see a spike in oil prices, which would lead to a hike in gasoline prices for American consumers.
Meanwhile, despite the doubled U.S. tariff on imports of Indian goods, due to the Indian imports of Russian crude, Indian refiners are set to raise their imports from Russia by between 150,000 barrels per day (bpd) and 300,000 bpd in September, or up by 10-20% compared to August volumes, according to traders and analysts.
The discount of Russia’s flagship Urals crude blend for Indian buyers has widened to between $3 and $4 per barrel amid continued pressure from the United States on India to force it to stop buying Russian crude. India continues to buy Russian crude, also incentivized by the wider discounts compared to the minimal discounts in June and July.
India will keep buying crude from Russia as it looks to cater to its interests, Indian Finance Minister Nirmala Sitharaman said early this month as India dismissed U.S. criticism that it is profiteering from importing Russian crude.
By Michael Kern for Oilprice.com
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