US President Donald Trump is angry with India over the purchase of Russian oil. His anger increased to such an extent that he imposed an additional tariff of 25 percent on India. Trump is continuously pressurizing India to stop purchasing Russian oil. Its effect is now visible. India, the second largest importer of Russian crude oil, has reduced its purchases from Russia. India is dependent on imports for its crude oil. It buys crude oil from Russia at a huge discount, but due to American pressure it has to reduce its purchases, which will affect India’s oil import bill. Obviously, as the bill increases, prices will also increase. This increase in the crude oil purchase bill may increase the prices of petrol and diesel in the country. Moreover, crude oil supplies from Russia to India are likely to remain volatile in the near future, as refineries are adjusting their purchase volumes and reducing stockpiles. Due to this, difficulties may increase in the coming days.
U-turn of Russian oil ships
Tanker ships carrying crude oil from Russia to India’s Gujarat coast have suddenly changed course in the Baltic Sea. According to a Bloomberg report, tanker ships diverted their routes due to increasing US sanctions on Russian oil companies, adding to the uncertainty at Indian refineries. Following the US sanctions, India’s Indian Oil Corporation had said that it is ready to comply with the US sanctions.
Government company also distanced itself from Russian oil
After IOCL and Reliance Refinery, another government company, HPCL (Hindustan Petroleum Corporation Limited) has stopped buying oil from Russia. HMEL is the first Indian company to officially announce that it will not buy oil from Russia following US sanctions. Amidst the distance from Russian oil, the biggest concern is oil supply. Could there be an increase in the prices of petrol and diesel in India in the coming days?
How much pressure will increase on India with distance from Russian oil?
India’s oil purchases from Russia to increase by nearly 19 times from 2021 to 2024. India buys 19 lakh barrels of oil from Russia every day. If India moves away from Russian oil, it could suffer an economic loss ranging from $3.2 million (Rs 28,08,94,720) to $6.4 million (Rs 56,17,89,440) per day.
Will the prices of petrol and diesel become expensive?
Amidst the ongoing restrictions on the supply of crude oil in the international market, the biggest concern is the rising prices of petrol and diesel in India. Shortage in supply or rising prices of crude oil can increase the prices of petrol and diesel. If tensions over Russian oil continue, oil prices may rise in the coming days. However, the matter of relief is that oil prices in India are stable. There has been no increase in the prices of petrol and diesel. In the capital Delhi, petrol is being sold at Rs 94.72 and diesel at Rs 87.62 per litre. If India stops buying Russian oil, prices of petrol and diesel may increase. Due to increasing isolation from Russian oil, India will have to import expensive oil from other sources. Crude oil prices may rise across the world due to turmoil in the global market. Oil imports would require higher market prices, increase refinery costs and could push up oil prices in India.
Factors affecting prices of petrol and diesel
Note that petrol and diesel prices are stable due to tax cuts by the central government and many states from 2022. Crude oil prices, position of the rupee against the dollar, government taxes and refining costs are among the many factors affecting oil prices.
