In the atmosphere of war, if India wants to buy oil from Russia, will the price decrease?

Posted on 15th Mar 2022 by rohit kumar

The European Union has decided to cut oil and gas imports from Russia because of the attack on Ukraine. Britain has also decided to get rid of Russian oil by the end of this year. At the same time, America has banned oil and gas imported from Russia.

 

Obviously, in this atmosphere of war, Russia has suffered a lot due to the decision of these countries.

 

To compensate for this loss, Russia has turned to India.

 

Russia wants India to buy its oil and increase its investment there in the coming days.

 

On 10 March, Russian Deputy Prime Minister Alexander Novak spoke to India's Petroleum and Natural Gas Minister Hardeep Puri about this.

 

After this conversation, a statement was issued from the Russian side. It was told how India imports petroleum products worth $1 billion annually from Russia and there is every possibility of it increasing in the future.

 

According to the news agency Reuters, India is considering taking crude oil and other commodities from Russia at subsidized prices.

 

But there has been no official response from the Government of India on this.

 

Oil consumption in India and imports from Russia

 

In such a situation, the question arises that how much more oil can India buy from Russia amid US sanctions? And will it bring down the price?

 

According to energy sector experts, 12 percent of the world's oil is produced in Russia, 12 percent in Saudi Arabia, and 16-18 percent in America.

 

India imports 85 percent of its oil, of which 60 percent are from Gulf countries.

 

India depends heavily on Saudi Arabia and the US for oil imports. Apart from this, India also takes oil from Iraq, Iran, Oman, Kuwait, Russia and also buys some from the spot market (open market).

 

India imports only 2% of its oil requirement from Russia.

 

When Russia meets most of Europe's oil needs, why does India, despite being a friendly country, but only 2% from Russia?

 

Energy expert Narendra Taneja says, "The answer lies to some extent in Russia's geographical location as well. The regions of Russia where oil is produced are slightly away from the eastern region. The problem with bringing oil from the north is that It is near the Arctic region, where snow remains for most of the time. The third way is the Black Sea which is currently being blocked."

 

In the last 10 years, India has started buying oil from many more countries, including the US and Russia, to eliminate dependence on one country in oil imports.

 

Narendra Taneja further says, "India has invested $ 16 billion in the field of oil and natural gas in Russia. But India does not buy that oil, it sells it to other countries."

 

Why is it difficult to buy oil from Russia?

 

At present, due to not buying oil from Russia, oil prices have increased all over the world.

 

In such a situation, it is believed that Russia may be ready to sell oil to India at a low price. Despite this, according to the experts, it is difficult for India to increase the import of oil from Russia.

 

Former Union Finance Secretary Subhash Chandra Garg says, "There are restrictions on buying oil from Russia only in America. India can buy oil from Russia at the moment, but the problem of bringing oil from Russia is more. Apart from this, there is a problem with payment on the purchase. may come."

 

Some experts believe that India and Russia can trade on the lines of the 'barter system' instead of trading in rupees and rubles, as India did during the sanctions on Iran.

 

But Subhash Garg does not agree with this.

 

In a conversation with the BBC, he says, "At the time of sanctions with Iran, both countries had adopted a system like 'barter system'. The amount of oil India was buying from Iran, the same price of wheat, Iran would buy from India, so that Money transactions are not needed. But at that time, the shipping line was operational, yet India was not able to buy as much oil from Iran as it needed. Iran did not have any problem with trading in rupees. There was a need, because of this it was possible.

 

But the circumstances are different at this time for importing oil between Russia and India.

 

The problem is how oil from Russia came to India, so the 'barter system' cannot run. Trade is disrupted from the Black Sea and Russia is unable to deliver its goods to the Siberia side. The second problem is that exports and imports are not the same between Russia and India. India buys more from Russia and sells less. The third problem is neither Russia is willing to take the price in rupees nor India is willing to take the ruble, so the case of Iran cannot go on here."

 

China has laid a pipeline to get gas and oil from Russia, which India does not have.

 

Apart from this, it is difficult to find ships bringing oil from Russia in the atmosphere of war, and even if they are found, it is difficult to insure them at this time.

 

Narendra Taneja also tells another side of India's troubles.

 

He says, "India consumes 5.2 million barrels of oil every day. India is the world's third-largest consumer of oil. India also imports one lakh or two lakh barrels of oil from Russia, so that the oil prices in India But there will be no impact. Such is the economics of oil in India."

 

Apart from this, it is difficult to find ships bringing oil from Russia in the atmosphere of war, and even if they are found, it is difficult to insure them at this time.

 

Narendra Taneja also tells another side of India's troubles.

 

He says, "India consumes 5.2 million barrels of oil every day. India is the world's third-largest consumer of oil. India also imports one lakh or two lakh barrels of oil from Russia, so that the oil prices in India But there will be no impact. Such is the economics of oil in India."

 

Also Read: Ukraine War India will buy cheap oil, preparing to take big advantage of the sanctions imposed on Russia