A significant increase in Russian oil imports by India could expose New Delhi to a “great risk” as the US prepares to step up enforcement of sanctions against Moscow for its invasion of Ukraine, a senior official in Washington said.
While US sanctions against Russia do not prevent other countries from buying Russian oil, the warning raises expectations that Washington will attempt to restrict other countries’ purchases to normal levels.
The US official’s comment comes ahead of Russian foreign minister Sergei Lavrov’s two-day visit to New Delhi and during the visit of US deputy national security adviser for economics Daleep Singh.
Refiners in India, the world’s third biggest oil importer and consumer, have been snapping up Russian oil through spot tenders since the war broke out on February 24, taking advantage of deep discounts as other buyers back away.
India has purchased at least 13 million barrels of Russian oil since the invasion began, compared with nearly 16 million barrels in all of 2021.
“US has no objection to India buying Russian oil provided it buys it at discount, without significantly increasing from previous years,” said the source who spoke on condition of anonymity. “Some increase is allowed.”
Aware of Russia-India Talks
The US state department said it is aware of talks between Russia and India concerning the purchase of oil, a spokesperson said.
“We continue to engage our partners in India and around the world on the importance of a strong collective action, including strong sanctions, to press the Kremlin to end its devastating war of choice against Ukraine as soon as possible.”
The Biden administration is coordinating with India and European countries to mitigate the impact of Russia’s invasion of Ukraine on energy markets, while encouraging steps to reduce dependence on Russian energy, the spokesperson said.
US sanctions are reducing the ability of Russia, which normally produces about 1 in every 10 barrels of global oil, to get crude to market.
The Paris-based International Energy Agency has estimated that sanctions and buyer reluctance could remove 3 million barrels per day from global markets of Russian crude and refined products from April.
The source said Washington has no problems if India settles trade with Russia in rupees or continues to pay in dollars, provided the transaction are sanctions-compliant and with permitted entities.
Mechanism Being Devised
India is devising a mechanism to settle trade with Russia, including through payment in rupees. “As long as they are compliant with sanctions and not significantly raising purchases, we are OK,” the source said.
Russia is facing an onslaught of international sanctions led by Western countries aiming at isolating it from the global economy, including shutting it out of the SWIFT global bank messaging system and restricting dealings by its central bank.
The White House has slapped sanctions against Russian entities and individuals among others, crippling Moscow’s economy.
The Biden administration has also banned US imports of Russian energy, including oil. But it has so far not targeted Russia’s oil and gas exports to other countries, as the administration weighs the impacts on global oil markets and US motor fuel prices.
New Delhi has called for an immediate ceasefire in Ukraine but has refused to explicitly condemn Moscow’s actions. It has abstained from voting on multiple UN resolutions on the war.
The US sanctions have granted a waiver till June 24 for settling energy trade with the Central Bank of Russia.
• Reuters with additional editing by Jim Pollard