'No pause' on Russian oil purchase amid Trump tariffs, says Indian Oil Corporation chairman

Donald Trump doubled tariffs on Indian goods to 50 per cent last week, citing New Delhi's purchases from Russia as the reason behind the move.

AS Sahney, chairman of Indian Oil Corporation, said that India has not paused its oil purchases from Russia following US President Donald Trump's move to double the country's tariff, noting that New Delhi's buying decisions are solely based on economic considerations.

Before February 2022, Russian crude oil accounted for less than 1 per cent of India's oil imports. (File Image)

Refiners like IOC, which is India's largest oil firm, buy crude oil from Russia purely on economic consideration and have not been asked to cut or boost purchase in response to US tariffs, Sahney was quoted as saying by news agency PTI.

The country's purchase volumes may reportedly fluctuate monthly on the basis of discounts offered on Russian crude grades like Urals. Previously, the discounts were as high as US$40 per barrel. However, last month, they narrowed down to just US$1.5, leading to reduced withdrawal.

The dip then led the discounts to be widened to about US$2.70.

India became the largest purchaser of Russian oil from 2022, after Western countries avoided Russian oil and imposed sanctions on Moscow for its full-scale invasion of Ukraine.

The US President has given heat to India over its trade with Russia, saying that New Delhi is "fueling the war machine". Last week, he imposed a 25 per cent tariff on Indian goods in addition to the previously imposed 25 per cent, taking the total levies to 50 per cent.

The US has repeatedly threatened to impose more tariffs if the purchases continue.

However, the chairman of the government-owned refiner said, "There is no pause," in India's purchase of oil from Russia. It has continued to flow to Indian refiners in July and August.

"We continue to buy, purely based on economic considerations, that is to say, if the pricing and characteristics of the crude make sense in our scheme of processing, we buy," Sahney told reporters.

"No special effort is being made to either increase or decrease (the import volumes). We are buying crude as per economic considerations," he added.

Before February 2022, Russian crude oil accounted for less than 1 per cent of India's oil imports. However, after Russia invaded Ukraine and the West shunned Russian energy, Moscow's crude became available at discounted rates in comparison to global benchmarks.

India seized the opportunity and boosted its purchases, significantly increasing its Russian oil imports for domestic energy needs.

Sahney further noted that at no time was there any sanction on Russian crude oil, saying that India, thus, continued to purchase based on its economic considerations.

"There are no sanctions on Russian crude. India has not done anything that violates any sanctions," he added.

"Such purchases will continue unless sanctions are imposed," Sahney said. He also mentioned that oil companies have not received any instructions from the government to either increase or decrease purchases. "We are doing business as usual," he added.

The IOC Chairman also commented on whether refiners have been asked to increase purchases from US as an attempt to pacify Trump. "Neither are we being told to buy more nor are we told to buy less from US or any other destination. Economic considerations dictate our actions," Sahney said.

Additionally, Bharat Petroleum Corporation Ltd (BPCL) director (finance) Vetsa Ramakrishna Gupta said that imports took a hit last month after discounts on Russian oil dipped to US$1.5 per barrel.

He said Russian oil made up 34 per cent of BPCL's crude intake in the first quarter, and added that the company hopes to return to 30 to 35 per cent ratio as long as there are no sanctions.

(with PTI inputs)