India defends oil deal with Russia

HYDERABAD: India on Friday defended its decision to buy discounted crude oil from Russia and insisted that legitimate energy transactions should not be politicised.

Reports suggested that India’s state-owned refiner Hindustan Petroleum Corp Ltd bought two million barrels of crude oil from Russia. A few days back, Indian Oil Corp had reportedly bought three million barrels of oil from Russia.

Reports suggested that Russia was offering a 20 per cent discount on oil purchases below global bench-mark prices. When asked about India considering buying discounted Russian oil, White House press secretary Jen Psaki said the US message to “any country” is to “think about where you want to stand when the history books are written.” She, however, said India has not violated US sanctions by purchasing discounted Russian oil.

According to sources, India believes that countries, which are self-sufficient in oil or those themselves importing from Russia cannot credibly advocate restrictive trading.

With the Russia-Ukraine war getting prolonged, New Delhi has been looking at ways to soften the blow that it received in the form of three-digit crude oil price.

Scott Sheffield, chief executive of top US shale oil firm Pioneer Natural Resources, suggested that crude oil will hit $200/barrel if the West completely stops importing the Russian oil.

With the US shale oil companies dragging their feet to boost their output, the crude oil could remain at an elevated level as no other oil-producing country could compensate the void created by ban on the Russian oil. Imports make up 85 per cent of India's oil needs or 4.7 million barrels a day. If the crude oil remains over $75 barrels for a prolonged period, it would affect India’s budget maths and increase pressure on the country’s forex reserves — a scenario similar to 1991 and 2012 crisis — and forced India to brave the prospects of US sanctions to acquire cheaper Russian oil.