India cannot simply stop buying Russian oil and switch to other suppliers, Nirmala Sitharaman has said. The Union finance minister cited global supply constraints and the needs of the country's 1.4 billion people.
At the BusinessLine Changemaker Awards on Tuesday, Sitharaman said moving away from Russian crude could drive up prices because the global supply pool remains limited.
“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,” she said. “It poses a severe challenge no doubt, but I think we will have to keep India's interest topmost,” she said.
Her remarks came days after US President Donald Trump signed the Lindsey O Graham Sanctioning Russia and Iran Act into law. The legislation gives the US president powers to impose tariffs of up to 100% on countries that are major buyers of Russian oil and gas, putting India and China among the countries potentially exposed to the measure.
{{/usCountry}}Her remarks came days after US President Donald Trump signed the Lindsey O Graham Sanctioning Russia and Iran Act into law. The legislation gives the US president powers to impose tariffs of up to 100% on countries that are major buyers of Russian oil and gas, putting India and China among the countries potentially exposed to the measure.
{{/usCountry}}Sitharaman said India would continue to source energy from different parts of the world, based on availability and suitability, while keeping domestic energy security in mind.
“We will choose to source our energy requirement from every corner of the world, and that which suits us, suits not for anything else but for the availability,” she said.
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‘Oil pool itself is coming down’
Sitharaman pointed to recent disruptions in the global energy market. This included attacks and damage involving facilities in the Gulf region, which she said reduced available supplies.
“Today just look at it realistically with the attack in Saudi Arabia and some crossfire hit at some other Gulf-related refineries, the oil pool itself is coming down,” she said.
India was already diversifying its crude basket, she said, but replacing Russian oil would require supplies from several different sources to meet the country's demand.
“To replace all that we need 1.4 billion people, the requirement has to be met from so many different sources already we are diversifying our oil basket,” she said.
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Indian refineries cannot process every type of crude
The finance minister also spoke of the technical constraints involved in switching suppliers. Indian refineries are largely configured to process medium crude where factors such as density and sulphur content affect whether a particular grade can be processed.
“So if you have to pick it up from somewhere else where it is available which cannot be even with some tweaking be treated by our refineries, what good is that for and whose cause are we then serving?” she said.
Sitharaman said the government therefore had to consider not just where crude was available, but also whether Indian refineries could process it.
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US pressure over Russian oil
The comments come as Washington steps up pressure on countries continuing to buy Russian energy.
India has remained one of the largest buyers of Russian crude since Moscow's invasion of Ukraine disrupted global energy markets and Western sanctions changed the flow of oil.
New Delhi has maintained that its energy purchases are guided by market conditions and the country's energy security requirements.
Zelensky asks India to stop buying Russian oil
Ukrainian President Volodymyr Zelensky also requested India and other major buyers to cut energy ties with Moscow. Russia's economy depended on countries including India, China and Turkey, he told The Wall Street Journal.
“Russia is basing its economy on India, sometimes Turkey and China. And it is obvious if these guys stop their energy trade with Russia, then it (Russia) will have to stop fighting the war,” Zelensky said.
Zelensky said ending energy trade with Moscow would increase pressure on Russia to end the war in Ukraine. He also said he hoped Trump would help bring the conflict to an end soon.
“I hope that we will end this (Russia-Ukraine war) and President Trump will help us to end this war. We need to do this as soon as possible, before winter, better before winter,” he said during a media interaction on the sidelines of the UN General Assembly in New York.