The United States and Britain are imposing tough measures to starve Russia of its oil cash as the conflict in Ukraine rages on. President Trump stated India has vowed to stop the purchase of Russian oil, although Indian officials have not publicly verified this decision. The pressure comes as Ukrainian President Volodymyr Zelenskiy is going to meet Trump in Washington this Friday. The two will address getting more military aid and energy assistance to Ukraine.
India Caught in the Middle
India has emerged as one of Russia’s largest oil buyers in the last three years. Today, Russia exports approximately 36% of all the oil India purchases, that is approximately 1.75 million barrels each and every day. Russia began offering oil to India at discounted prices after European nations declined to purchase from it.
Trump said in a press briefing on Wednesday that Prime Minister Modi guaranteed him India would discontinue these purchases. “I was not pleased that India was purchasing oil, and he guaranteed me today that they will not be purchasing oil from Russia,” Trump explained. He went on to say that China would be next.
But India’s foreign ministry announced Thursday that they are unaware of any call between Modi and Trump. They did confirm the two nations are discussing cooperation on energy issues. Indian refiners are preparing to purchase less Russian oil, as early as December, according to individuals with knowledge of the matter. But no one has officially instructed them to cease yet.
Britain Imposes Sanctions on Russian Firms
Britain imposed additional sanctions on Wednesday on Russia’s two biggest oil firms, Lukoil and Rosneft. They are among the biggest players in Russia’s oil sector. The sanctions do not end there. Britain also targeted Chinese firms that assist in the transfer of Russian oil. Shandong Yulong Petrochemical is among them, a Chinese refinery that refines 400,000 barrels per day and purchases plenty of Russian oil.
A number of Chinese port companies were also sanctioned: Shandong Jingang Port, Shandong Baogang International, and Shandong Haixin Port. Britain even sanctioned 51 vessels, including seven liquefied natural gas carriers. One Indian firm also found itself on the list, Nayara, a Mumbai refinery owned by Russia’s Rosneft. This firm was already under European sanctions and is fighting to continue operating.
What This Means Going Forward
China was not pleased with these actions. Their foreign ministry on Thursday stated they are against sanctions which do not conform to international law. They complained officially to Britain. Russia’s London embassy stated the sanctions would disrupt oil markets, increase costs for British consumers, and wouldn’t alter Russian policies either.
Oil prices remained unchanged on Thursday as it is thought that India will take time to actually cut Russian oil buys. Russia’s Deputy Prime Minister Alexander Novak stated that cooperation between Russia and India would be maintained despite the pressure.
Both India and China now have a tough decision: continue to purchase cheaper Russian oil or risk having issues with Western nations. Indian officials are presently in Washington for trade negotiations, where American negotiators have indicated that curbing Russian oil imports is crucial to any agreement. The US has already doubled taxes on Indian products. The scenario reveals how the war in Ukraine has made waves through the global economy, compelling nations to choose sides over energy transactions.
News At Glance
- US President Trump says India had committed to discontinue Russian oil purchases, although India has not announced any decision.Â
- Russia now supplies 36% of Indian oil imports, approximately 1.75 million barrels a day.Â
- Britain sanctioned Russian oil majors Lukoil and Rosneft, as well as Chinese firms that deal in Russian oil such as refiners and port operators.
- Indian refiners are gearing up to cut Russian oil imports possibly starting December, but received no official order to halt purchases yet.
- China and India are under pressure to make a choice between Russian cheaper oil and good ties with the West, particularly during trade talks.Â
FAQs
- Why is India purchasing so much Russian oil?
Russia has discounted prices after losing European buyers following the 2022 invasion of Ukraine.
- Will oil prices rise if India stops purchasing from Russia?
Prices have stayed stable thus far as traders expect any price changes to occur over time.
- What are the UK sanctions aiming for?
Russian major oil companies, Chinese entities trading Russian oil, ships, ports, and a Russian-held Indian refinery.
- Did Modi actually assure Trump that he’d end Russian oil imports?
Trump says yes, but India’s foreign ministry denies that they are aware of such a discussion among the leaders.
- How much Russian oil does China purchase?
India and China are the two largest consumers of discounted Russian crude in the world.
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