New Delhi
There has been no change in the prices of petrol and diesel in the country for about 10 months, but this situation may change soon. The reason for this is that due to America’s latest sanctions on Russia, the discount being given to India may end. A top government official said that the impact of the US government’s sanctions on Russian oil on Indian imports will be visible in two months. In the worst case, the discount India is getting on Russian oil may end. The central government had reduced the prices of petrol and diesel by Rs 2 per liter on March 4 last year, ahead of the Lok Sabha elections. India is the world’s third largest oil importer and consumer. The country imports 87% of its crude oil needs. There has been a huge increase in the import of crude oil from Russia in recent years.
On Friday, the Biden administration imposed new sanctions on Russian oil producers Gazprom Neft and Surgutneftegaz, as well as about 180 oil tankers. This means that secondary sanctions will be imposed on countries or persons purchasing oil from these two companies or getting oil delivered from banned tankers. So far, US sanctions have not had much impact on the Russian energy sector. Secondary sanctions have not been imposed on India or other countries buying Russian oil. Sanctioned buyers of Russian oil would find it difficult to pay in dollars, raise funds in the US, and do business with American companies.
discount will end
Gazprom is an important supplier to India while Rosneft is the largest supplier. Supply from Surgutneftegaz is negligible. Indian refiners are heavily dependent on traders for Russian supplies. This is why sanctions on tankers are more lethal than sanctions on Gazprom. Due to the new restrictions, buyers have got time till March 12 to complete the deals already made. The official said that the latest US sanctions on Russia will definitely affect supplies to India. Its effect will be visible after two months. In the worst case, the discount on Russian oil for India will end.
After the Ukraine war, India is buying large quantities of crude oil from Russia at a discount. The official said that it is possible that crude oil not covered by the sanctions will start being sold below the price limit of G-7 countries at $60 per barrel. This would give him access to western shipping and insurance. This way the market can find a way to bring oil to us. “The market is still unable to understand what this actually means,” the official said. He said that its full impact will depend on many factors. This includes the return of Donald Trump as President, Russia’s response and the market’s reaction to the sanctions.
price of crude oil
The official said Indian refiners are looking for alternative supplies to offset the possible impact on Russian supplies after March 12. Indian refiners buy Russian crude oil from the spot market. According to media reports, Reliance Industries has recently made a big deal to buy crude oil from Russia. Spot buyers will soon switch to alternative options, while term deal buyers will have the option to revise volumes or exit the deal, the official said.
Meanwhile, the price of crude oil has increased by about $5 in the last one week to cross $81 per barrel. This is its highest level since August. However, the official said the rise in crude oil prices is not sustainable as there is ample spare capacity available globally. The official said additional supplies from the US, Canada, Brazil and Guyana could help cushion the impact on any supplies from Russia.
