Why can’t India just stop buying Russian crude oil? FM Nirmala Sitharaman explains

India can’t just stop purchasing Russian crude oil, said Finance Minister Nirmala Sitharaman, amid US’ threats to impose 100 per cent tariffs on major buyers of Russian energy, which includes both India and China.

Speaking with BusinessLine at the Changemaker Awards, Sitharaman said, “India can get out of Russia and say all right I'm buying oil from somewhere else. The moment you come out, the available pool, which is limited, is going to shoot up in price.” The oil pool itself is coming down following the attacks in Saudi Arabia and other Gulf-related refineries, Sitharaman said.

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She said Indian refineries are largely suitable for the medium in terms of density and sourness in terms of sulphur content. Sitharaman said refineries can take the medium sour crude but switching to crude that can’t be processed by Indian refineries even with modifications would raise questions about the economic rationale of the move.

“What good is that for and whose cause are we then serving?” she asked, further adding, “We need to be practical to see the citizens and Indian requirement of energy. It poses a severe challenge no doubt, but I think we will have to keep India’s interest topmost.”

The finance minister said that India will choose to source its energy requirement from every corner of the world and that which suits India when it comes to availability.

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US President Donald Trump has signed the Lindsey O Graham Sanctioning Russia and Iran Act into law, giving him powers to penalise countries that buy Russian oil.

Meanwhile, India's imports of Russian crude oil fell by 16.5% in August compared to July, reaching about 2.1 million barrels per day, as per a report in Reuters. At the same time, supplies from West Asia increased, supported by Abu Dhabi National Oil Company selling oil from outside the Strait of Hormuz, according to trade data.

Overall, India's oil imports declined by 8.8% in August to 4.44 million barrels per day. Preliminary data from Kpler suggested that India's imports of Russian oil may fall further to 1.9 million barrels per day in September.