India has proposed that the US allow crude purchases from sanctioned countries such as Iran and Venezuela if the Trump administration insists on cutting down imports of Russian crude.
The proposal was made during a bilateral meeting between US officials and a visiting team of Indian delegation. Indian representatives have emphasised that simultaneously cutting off supply from Russia, Iran and Venezuela — all major oil producers — could lead to a spike in global prices, people familiar with the negotiations told Bloomberg.
India is facing a 25 per cent penal tariff for buying Russian crude, taking the total incidence on the country’s merchandise exports to 50 per cent. New Delhi’s representatives, including commerce and industry minister Piyush Goyal, travelled to the US for talks with Washington to secure a trade deal and lower tariff.
Goyal said earlier this week in New York that India is open to increasing its purchases of American oil and gas, adding that “our energy security goals will have a very high element of US involvement.”
US energy secretary Chris Wright also described India as an ‘awesome ally’, saying “I’m a huge fan of India; we love India. We look forward to more energy trade, more interactions back and forth with India,” he said.
However, he said buying Russian oil would be a no-go for the Trump admin.
“Of course, we wish India would work with us to buy -- you can buy oil from every nation on the earth, just not Russian oil. That’s our position. America has oil to sell, but so does everybody else. We don’t want to punish India. We want to end the war, and we want to grow our relations with India,” he said.
Russia was forced to discount its crude after many others shunned trade with Moscow due to the war in Ukraine. Almost 90 per cent of India’s oil needs are met by imports, and cheaper Russian barrels have helped reduce the burden on its import bill. Iranian and Venezuelan oil would also be similarly discounted.
India stopped buying Iranian oil in 2019, and the nation’s largest private refiner — Reliance Industries Ltd. — halted purchases of Venezuelan crude this year as the US tightened sanctions. Processors can shift to buying more Middle Eastern barrels, but it would come at a higher cost and inflate the overall import bill.
Oil refiners paid an average $68.90 a barrel for Russian crude in July, compared with $77.50 from Saudi Arabia and $74.20 from the US, according to data from the commerce ministry.
India is the biggest buyer of Russian oil delivered by tanker, while China is the largest overall importer, including deliveries by pipeline.
The oil market is also on track for a large surplus next year as the OPEC+ alliance and producers from outside the group boost output, which is likely to put downward pressure on global crude prices.