India, a top purchaser of Russian oil, has stopped paying for Russian premium crude oil for two months now, according to a local newspaper.
Prior to Russia’s war in Ukraine, India rarely used to buy Russian oil. But after Moscow lost European buyers due to sanctions imposed by the West in response to the conflict, Moscow boosted its trade with China, India and Turkey, offering them discounts.
Mikhail Svetlov/Getty Images
Russia’s Deputy Prime Minister Alexander Novak said in December 2023 that India has become a major buyer of Russian oil, with supplies to the country increasing to about 40 percent.
Kommersant, a national Russian newspaper, reported on Thursday that India—the largest buyer of seaborne shipments of Russian oil—has refused to purchase Russian premium ESPO grade oil, which has a low sulfur content—for about two months now. Imports stopped in January and February, the publication said.
Newsweek has contacted Russia’s foreign ministry for comment by email.
The move will serve as a blow to Moscow, which depends on its oil exports and energy industry; they make up some 30 percent of the country’s budget revenues, and fund the ongoing war in Ukraine. Russia is the world’s third-largest producer of oil, accounting for more than 12 percent of global crude-oil production, according to Statista, and the energy industry is considered a crucial lifeline for Russian President Vladimir Putin’s economy.
When President Joe Biden announced a ban on Russian oil imports in March 2022, weeks into the full-scale war, he said the move would target the Russian economy’s “main artery.” The G7, the EU and Australia also imposed a price cap banning firms from insuring, financing, and shipping Russian seaborne oil exports sold above $60 a barrel.
India has also reduced shipments of Sokol, another premium grade of Russian oil, partially due to payments difficulties.
Billions of dollars in Russian oil profits are stuck in Indian banks due to restrictions by the Reserve Bank of India, which prevent Russian companies from transferring rupees stored in bank accounts in India to Russia and converting them into rubles. This has thwarted Putin’s attempts to de-dollarize bilateral trade with India.
On Tuesday, Amos Hochstein, Biden’s energy and global infrastructure adviser, told Reuters that the U.S. was attempting to help India negotiate lower prices for Russian oil after Washington imposed further sanctions on tankers carrying the fuel above Western price caps.
“At the end of the day, my goal is not to take it off the market, I’m not looking to take these tankers, take the crude, the product, off the market,” said Hochstein. “I’m trying to get the Indians to negotiate better prices by forcing the tankers into a different direction. I think the Indians understand what we’re trying to do.”
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