US President Donald Trump has created a huge controversy over India’s purchase of Russian oil. Even now, India is paying a 25 percent penalty on top of a 50 percent tariff for buying Russian oil. It should be noted that China is the largest customer of Russian crude oil worldwide, followed by India. Currently, we are buying crude oil worth up to 2.6 billion euros from Russia. A European research institute reported on Friday that Indian companies are refining this oil and selling it abroad, with Australia being our biggest customer.
America’s concern is that we should stop this purchasing and also stop the earnings from selling the refined oil. In November, 47 percent of Russia’s total crude oil went to China, 38 percent to India, 6 percent to Turkey, and 6 percent to the European Union. Oil purchases may increase further in December as Russian oil tankers have already departed for India. To disrupt this buying and selling process, the US imposed sanctions on October 22 on major Russian oil companies Rosneft and Lukoil.
Indian companies like Reliance, HPCL, HPCL Mittal Energy, Mangalore Refinery, etc., were buying oil in large quantities from these companies. After the US sanctions and due to the tariff penalties, the import of crude oil from these large companies has been stopped, the effect of which will be visible next year. The US wants India to buy American crude oil at its prices. Russia says that it will sell oil to India in its currency and will continue to offer discounts. The US says that by buying such a large quantity of oil, India is fueling the Russia-Ukraine war.
Therefore, to establish peace in the world, India will have to stop buying oil from Russia. However, the recent major summit between Modi and Putin in New Delhi makes it clear that India may reduce its oil purchases, but it will not stop them completely. Indian investors have found a way to buy crude oil from smaller Russian companies that have not been sanctioned by the US. India wants to maintain a trade balance with both countries, but only time will tell how successful India will be in achieving this.