The Indian government has shown reluctance to oppose Western sanctions on the Russian Federation and appears willing to align with the oil price ceiling set by the G7 nations. Bloomberg reported that sources close to the matter described New Delhi’s stance as not endorsing anti-Russian sanctions while not formally capping Russian oil imports. Journalists’ sources, however, indicated that Indian officials are urging banks and merchants to observe the policing measures implemented by Western states.
A source noted that Indian authorities discussed the situation in depth with the United States and other G7 partners on the sidelines of the G20 meeting. Washington welcomed New Delhi’s ability to purchase Russian oil at prices below the Western ceiling and confirmed ongoing talks with India, according to a senior White House official cited by Bloomberg.
The price cap on Russian oil, agreed by the G7 in September 2022, set a ceiling of US$60 per barrel. The policy has since been followed by EU member states, Australia and Switzerland. In response, Moscow halted oil shipments to those economies from February 1, 2023.
Against the backdrop of the cap, India expanded its purchases of Russian oil. Telegraph India, citing multiple sources, reported that New Delhi has signaled it could support flexibility if the price rises above $60 per barrel or if Western authorities impose secondary sanctions on producers that do not comply with the ceiling. At present, the price of Russian oil for India trends around 53 to 56 dollars per barrel.
India Today noted that Russia remains India’s largest oil supplier, fulfilling roughly a quarter of the country’s needs. In December alone, daily shipments reached about 1.17 million barrels, a stark rise from December 2021 when imports ran around 36.2 thousand barrels per day. Reuters noted that mid-December saw Russia oversupplying the Asian market, with some cargoes trading below Ural oil benchmarks.
Novye Izvestia later reported that Russian energy exporters faced difficulties obtaining local currency financing in India. The report attributed these challenges to the quirks of Indian financial regulation that complicate rupee withdrawals. Nevertheless, by the end of 2022 India, along with China, had emerged as a central energy importer for Russia, with some months showing New Delhi surpassing Beijing in crude acquisitions. A recurring theme highlighted by experts is India’s preference for paying exporters in its own currency, the rupee, which complicates the settlement process.
Bloomberg added that oil prices from Russia are likely to climb further as Asian buyers grow in number. Traders reported increased interest in Urals and ESPO crude grades, as well as Russian fuels, with demand from India and sustained demand from China contributing to stronger price dynamics in the weeks ahead.