Will India cut down on Russian crude purchases due to US tariffs? Here’s what we know

Indian refiners may reduce purchases of Russian crude for November deliveries due to a new US sanctions law that increases the risk of tariffs on countries buying Russian oil.

India, the world’s third-largest crude buyer, has sourced over half of its imports from Russia in recent months to manage high prices and supply disruptions from the Middle East. However, leading Indian refiners have recently started exploring alternative sources, according to a report in Bloomberg that cited industry sources.

The US law, signed last week, allows the President to impose tariffs on countries purchasing Russian crude. India, the largest buyer of Russia’s seaborne oil, has faced similar tariffs before, which were later removed.

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Imports of Russian crude into India have already declined, averaging about 1.9 million barrels per day in September. This accounts for more than 35% of total imports and is the lowest level since April, according to Kpler.

Replacing Russian crude may be challenging due to the volume of purchases and price differences. Russian Urals crude delivered to India cost around $133 a barrel last week, while Middle Eastern grades like Oman and Murban were priced higher.

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The situation is further complicated by disruptions in the Strait of Hormuz, affecting global crude markets.

Meanwhile, India’s oil demand is increasing as a new refinery in Rajasthan and expansions at existing plants push purchases towards a record 5.4 million barrels per day.

Negotiations for November Russian crude usually start in late September, amid uncertainty over how the US will enforce the new law.

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India is also monitoring whether the US will apply these measures to other major Russian energy buyers, including China. The law permits tariffs within 30 days on goods from major buyers, with rates potentially reaching 100%.

New Delhi has adjusted Russian oil imports in response to US pressure but maintains that its decisions are driven by the need to secure affordable energy for its 1.4 billion population.