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News18
6 days ago
- Business
- News18
What Happens If India Stops Buying Russian Oil? The World Could Feel The Jolt
A sudden stop would hit India's energy security, disrupt global refining, inflate shipping costs, and squeeze already tight fuel markets In 2022, the Ukraine war didn't just redraw Europe's security map, it also rewired the global oil trade. One of the biggest shifts was in New Delhi. India went from buying almost no Russian oil to making Moscow its top supplier, cushioning itself from global price spikes and keeping pump prices stable at home. That pivot helped India secure affordable energy while much of the world battled soaring inflation. But today, the same policy is under fresh strain. US President Donald Trump has doubled tariffs on Indian goods to 50 per cent, tying the move directly to Delhi's continued purchases of Russian crude. On top of that, the White House is weighing secondary sanctions, penalties on other countries and companies doing business with Russia, which could hit Indian refiners, shippers, and banks. From Barely A Trickle To India's Biggest Oil Stream Before the Ukraine war, Russian crude accounted for less than 2 per cent of India's imports in 2021, according to the Petroleum Planning and Analysis Cell (PPAC). By mid-2025, that share jumped to 35-40 per cent, roughly 1.7–2 million barrels a day. As per Reuters, in June 2025, imports from Russia hit an 11-month high of 2.08 million barrels a day, making up 44 per cent of India's total crude intake. DW reports that between 2021 and 2024, India's Russian oil purchases grew nearly 19-fold, from 0.1 to 1.9 million barrels a day, as Western sanctions on Moscow created room for new buyers. Petras Katinas, an energy analyst at the Centre for Research on Energy and Clean Air (CREA), told DW that these discounts saved India up to $33 billion between 2022 and 2024, calling the decision part of India's long-standing foreign policy of balancing ties with Washington, Moscow, and Beijing while prioritising 'energy security and affordability." Why India Can't Just Swap Suppliers Overnight Oil is not a one-size-fits-all commodity. Refineries are configured to process specific crude grades. Russian medium-sour grades, like Urals, are well-suited for India's complex refineries, especially for making diesel, the fuel that powers trucks, trains, and farm equipment. If those supplies stopped suddenly, India would have to compete for similar barrels from the Middle East, West Africa, or the US Gulf. That would mean: Higher costs — as competition bids up prices for those grades. Longer voyages — tying up ships and pushing up freight rates. Potential diesel shortages — because not all replacement grades yield diesel as efficiently. This is why even a willing buyer can't simply 'flip a switch" on suppliers without ripple effects at home and abroad. Why The World Would Feel It Too India is not just a major oil importer; it's a refining powerhouse. Some of the Russian crude it buys is turned into petrol, diesel, and jet fuel for export to Asia, Africa, and even Europe. In 2023–24, India supplied around 15 per cent of Europe's imported diesel, according to industry tracking data. If India reduced its Russian purchases, those refined fuel exports could shrink or get more expensive, tightening already-low diesel inventories in Europe and raising transport costs globally. On the supply side, Russia would have to find other buyers for barrels now going to India. China could take more, but it already imports large volumes. Turkey and smaller Asian economies would step in only at deeper discounts, meaning Moscow might cut output, removing supply from the market. Either way, the adjustment would disrupt the balance of who sells to whom, and at what price, the same kind of global reshuffle that in 2022 pushed Brent crude above $120 a barrel. How Bad Could The Price Shock Be? For global markets, a sudden halt in Russia's oil exports could set off price and trade upheavals similar to the turmoil of 2022, when sanctions prompted Moscow to reroute supplies to India and China at steep discounts. Analysts warn that if the roughly five million barrels per day Russia sends abroad were abruptly pulled from the market, prices could jump sharply as buyers scramble for alternative sources. Even with OPEC recently raising production, industry experts say replacing such a large volume quickly would be extremely difficult due to limited spare capacity and logistical hurdles. 'There is nowhere to get those five million [barrels] fast enough to prevent a spike in oil prices," Alexander Kolyandr, senior fellow at the Center for European Policy Analysis, told the UK's Independent. Past estimates from the US Federal Reserve suggest that every $10 increase in crude prices adds about 0.2 percentage points to inflation in the United States. In a worst-case scenario, if Brent were to leap from around $66 a barrel to the $110–$120 range, inflation could climb by about one percentage point, pushing up costs for fuel, transport, and food worldwide. The Shipping Factor And Why It Matters Beyond Oil Energy flows don't just change prices, they change shipping patterns. Sending Russian oil to China or Africa instead of India means longer voyages. In shipping economics, this 'ton-mile" increase ties up tankers for longer, reducing available ships for other cargoes like grain or metals. That can push up freight costs for goods unrelated to oil, adding another layer of inflation that households in far-off countries will feel. The US Tariff And Sanctions Twist This energy story is tightly linked to trade tensions. Trump's latest executive order doubles tariffs on Indian goods to 50 per cent over Russian oil purchases. According to a report by the State Bank of India (SBI), a 50 per cent tariff on Indian pharmaceutical exports could cut earnings by 5–10 per cent in FY26. The US could also face higher healthcare costs. India supplies about 35 per cent of its generic drug demand, used in 90 per cent of prescriptions. DW reports that secondary sanctions 'raise the stakes" by threatening Indian companies' access to the US financial system, exposing refiners, banks, and shippers to potential penalties. How India And China Are Responding Both India and China have rejected what Beijing calls US 'coercion and pressure." India has accused the West of hypocrisy, pointing out that the EU still imports Russian energy in significant volumes — especially through exempt LNG worth $8.5 billion in 2024, pipeline gas via TurkStream (over 9.9 bcm in the first half of 2025), and fertilisers — even as overall shares have fallen since 2022. Washington initially supported India's Russian oil purchases in 2022, arguing they helped stabilise global prices when Europe was scrambling for non-Russian supplies. China, the world's largest buyer of Russian oil since 2022, may be less vulnerable to secondary sanctions because its trade with the US — worth over $580 billion — gives it greater bargaining power. Katinas told DW that China's control of rare earth minerals is another lever it could use to soften US measures. What It Would Cost India And What It Would Cost The World SBI estimates that if India stops buying Russian oil entirely, its fuel import bill could rise by USD 9.1 billion in FY26 and USD 11.7 billion in FY27. The extra costs could feed into inflation, widen the fiscal deficit, and strain the rupee. Globally, losing India's refining output from Russian crude could deepen fuel shortages, especially in Europe's diesel market, and push up energy costs for transport, manufacturing, and agriculture. The inflation hit wouldn't be confined to oil-importing countries, even oil-exporting economies could see costs rise in sectors dependent on shipping and imported goods. Is A Sudden Stop Likely? Most analysts doubt India would drop Russian oil overnight, not because it wants to defy US pressure, but because the mechanics of global oil supply make a sudden exit risky and expensive. Replacing 1.7–2 million barrels a day at short notice would require not just finding new sellers, but also securing long-term contracts, rearranging shipping, and in some cases reconfiguring refinery operations. Kpler's Sumit Ritolia told DW it might take up to a year to cut reliance if needed, adding: 'I don't see us going down to zero anytime soon." That's partly because India's strategy has been to buy the most cost-effective crude available while keeping its supplier network broad, it already sources oil from around 40 countries, but Russian barrels have been the most competitive since 2022. A gradual reduction, trimming volumes over several quarters, would give refiners time to line up alternative term deals with Middle Eastern, West African, or US suppliers, allow OPEC+ (the alliance of OPEC members and partner producers such as Russia) to adjust production to prevent an extreme price spike, and give shipping markets space to adapt to new routes. For the world, a phased approach would mean a gentler adjustment instead of a sudden scramble for the same grades. The Bottom Line top videos View all If India were to suddenly stop buying Russian oil, the effects would ricochet through the global economy: oil prices could surge, shipping lanes would be re-routed, inflation would rise from Delhi to Detroit, and fuel shortages could bite in already tight markets. But a phased approach is far more likely, one that keeps India's energy security intact while giving the global market time to adapt. That would avoid a repeat of the 2022 chaos, when oil prices soared and trade flows scrambled, affecting consumers from Asia to Europe. About the Author Karishma Jain Karishma Jain, Chief Sub Editor at writes and edits opinion pieces on a variety of subjects, including Indian politics and policy, culture and the arts, technology and social change. Follow her @ More Get Latest Updates on Movies, Breaking News On India, World, Live Cricket Scores, And Stock Market Updates. Also Download the News18 App to stay updated! tags : crude oil prices donald trump India-Russia relations indian economy russia oil view comments Location : New Delhi, India, India First Published: August 08, 2025, 16:26 IST News explainers What Happens If India Stops Buying Russian Oil? The World Could Feel The Jolt Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. 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Time of India
05-08-2025
- Business
- Time of India
Donald Trump's new salvo: Indian refiners may have to find new markets
MUMBAI: In addition to Indian refiners resuming their procurement of crude oil from the West Asia, Guyana, Brazil, the US, and Canada, US President Donald Trump 's new salvo on Monday could mean that refiners will have to seek new markets for their refined products derived from crude oil. Less than a week after the US announced a 25% tariff on imports from India "plus a penalty", Trump on Monday again raised the issue of India buying oil from Russia and profiting from it, adding that he would be "substantially" raising the tariff "paid by India to the USA". Thus far, the European Union and the US were the largest markets for refined petroleum products, largely petrol, diesel, and aviation turbine fuel (ATF) among others. Before the start of the Russia-Ukraine war, Indian refiners imported 85% of crude oil from the Gulf countries, and Russian oil accounted for less than 0.2% of India's imports at $5.2 billion. But after the war began, this share went up to 35-40% of the country's crude intake, helping reduce overall energy import costs and contain inflation. By the end of December 2024, imports from Russia climbed to $56 billion, a nearly 10-fold increase. According to the Petroleum Planning and Analysis Cell, under the Ministry of Petroleum and Natural Gas , last fiscal year India's exports of petroleum products grew by 3.4% in volume terms to 64.7 million tonnes in FY25, on the back of increased shipments of motor spirit (petrol), petcoke, and fuel oil. However, in value terms, the exports declined by almost 7% to $44.3 billion during the fiscal year compared with $47.7 billion in the year ago. The dip in export value was due to subdued prices in the current year.
Time of India
04-08-2025
- Business
- Time of India
Donald Trump's new salvo: Indian refiners may have to find new markets
MUMBAI: In addition to Indian refiners resuming their procurement of crude oil from the West Asia, Guyana, Brazil, the US, and Canada, US President Donald Trump 's new salvo on Monday could mean that refiners will have to seek new markets for their refined products derived from crude oil. Less than a week after the US announced a 25% tariff on imports from India "plus a penalty", Trump on Monday again raised the issue of India buying oil from Russia and profiting from it, adding that he would be "substantially" raising the tariff "paid by India to the USA". Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program Thus far, the European Union and the US were the largest markets for refined petroleum products, largely petrol, diesel, and aviation turbine fuel (ATF) among others. Before the start of the Russia-Ukraine war, Indian refiners imported 85% of crude oil from the Gulf countries, and Russian oil accounted for less than 0.2% of India's imports at $5.2 billion. But after the war began, this share went up to 35-40% of the country's crude intake, helping reduce overall energy import costs and contain inflation. By the end of December 2024, imports from Russia climbed to $56 billion, a nearly 10-fold increase. According to the Petroleum Planning and Analysis Cell, under the Ministry of Petroleum and Natural Gas , last fiscal year India's exports of petroleum products grew by 3.4% in volume terms to 64.7 million tonnes in FY25, on the back of increased shipments of motor spirit (petrol), petcoke, and fuel oil. However, in value terms, the exports declined by almost 7% to $44.3 billion during the fiscal year compared with $47.7 billion in the year ago. The dip in export value was due to subdued prices in the current year. Live Events
Arabian Post
24-07-2025
- Business
- Arabian Post
Oil Demand Peaks in Summer, Not Winter
Arabian Post Staff -Dubai Global oil consumption has shifted, with demand now peaking in the third quarter instead of the traditional fourth, signalling a structural change reshaping markets during the summer months. Analysts point to stronger consumption from Asia—particularly China and India—alongside diminished heating fuel use in advanced economies as key drivers behind this trend, which carries significant implications for trading patterns, strategic reserves and pricing dynamics. Industry data show that consumption of heating oil and kerosene in wealthy nations has declined steadily. In the US, fewer households rely on refined petroleum for heating—dropping from 17 % in 1990 to just 9 % today—while Europe has seen even steeper falls. Conversely, jet fuel use during Northern Hemisphere summers has grown, especially as holiday travel resumes. This has pushed demand peaks into July–September, reversing a long-standing seasonal rhythm. Fuel consumption patterns in emerging economies present a stark contrast. Many countries, including those closer to the equator, rely on oil year-round for industrial power, electricity generation, and water desalination. Saudi Arabia, for instance, burned over 800,000 barrels per day of crude in just one summer to power air conditioning—a volume comparable to Belgium's entire daily petroleum demand. ADVERTISEMENT Climate change compounds the shift. Milder winters reduce heating demand, while hotter summers elevate energy needs for cooling and travel. In 2025 so far, global oil consumption in the third quarter is projected to exceed fourth-quarter levels by approximately 500,000 barrels per day—the fifth recorded year this has happened since 1991. This transformation carries consequences for market tightness and pricing. Although OPEC+ and rising non‑OPEC output have attempted to balance supply, physical markets appear increasingly tight during summer months. In mid-July, Brent crude hovered in the mid‑US$60s, reflecting supply constraints despite softening from spring lows. Speculative traders, noting robust seasonal demand, have also increased their net long positions in Brent and gasoil contracts. Asia's role has been pivotal. China ramped refinery runs to over 80 % of capacity in June—the highest levels in five years—as stockpiling alongside consumption drove strong throughput. Meanwhile, Asia's crude imports rose by around 510,000 bpd in the first half of 2025, underscoring the region's impact. Despite cautious forecasts from the IEA and OPEC—projecting crude demand growth of 700,000 bpd and 1.29 million bpd respectively—actual refinery intake and imports suggest potential underestimation. India's fuel consumption trends provide further insights. June data from the Petroleum Planning and Analysis Cell show fuel demand was 20.31 million tonnes—down 4.7 % from May but up 1.9 % year-on-year—reflecting monsoon-related dips typical through August and September. Diesel usage, especially linked to industry and logistics, is a key part of India's expanding consumption profile. OPEC+ has responded to these dynamics. In August, the alliance approved production increases of roughly 548,000 bpd aiming to satisfy peak Q3 demand. Simultaneously, US shale output remains robust; American producers reported nearly 13.5 million bpd in April, although well completion rates have slowed, reflecting the dependency on prices. Nevertheless, the market outlook grows more uncertain as it heads into fourth quarter. The EIA forecasts OECD inventories will build to 62 days' worth of supply in the second half of 2025—rising further to 66 days by end-2026—signalling a potential surplus as summer demand wanes. EIA projections for 2026 also expect US production to decline, with WTI prices retreating toward US$53 per barrel. Pricing reflects this shift. Oil markets have shown summer tightness in 2025, but expectations for a Q4 surplus weigh on medium-term prices. The IEA forecasts refinery throughput will drop from a projected August peak of 85.4 million bpd to about 81.7 million bpd by October, implying weaker demand later in the year. The shift in seasonality thus becomes a critical market pivot. Traders, refiners and producers must recalibrate strategies around production schedules, storage cycles and investment decisions. Q3 now demands heightened vigilance—from physical balancing to hedging strategies—while Q4 may require reassessment of storage utilisation and pricing risk.
Time of India
17-07-2025
- Business
- Time of India
Gujarat tops in domestic PNG adoption against non-Ujjwala LPG connections
Ahmedabad: Gujarat is nearing 36 lakh domestic piped natural gas (PNG) connections till April 2025, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas. Another data set that points to growing domestic PNG use is from the Petroleum and Natural Gas Regulatory Board (PNGRB). It says that Gujarat has a 39.7% share or 32.88 lakh domestic PNG connections against non-Ujjwala LPG connections of 82.75 lakh in the state. PPAC has put the number of domestic PNG connections at 35.93 lakh as of April 30, 2025. Although Maharashtra has the highest number of domestic PNG connections at 40.42 lakh according to PPAC, Gujarat tops the country in terms of domestic PNG connections against non-Ujjwala LPG connections with around 39%, which is far higher than Maharashtra's 14%. PPAC states that Gujarat is a clear leader in the adoption of PNG by commercial and industrial users. India has a total of 45,518 commercial PNG connections, out of which 24,122 are in Gujarat. Out of 20,556 industrial PNG connections nationwide, Gujarat has 5,851 connections at the end of April 2025. You Can Also Check: Ahmedabad AQI | Weather in Ahmedabad | Bank Holidays in Ahmedabad | Public Holidays in Ahmedabad Milind Torawane, MD of Gujarat Gas Ltd, said, "Gujarat has always been a leader in the PNG segment, and over the years, the position has become stronger. Gujarat had early discoveries of natural gas in Ankleshwar, Dahej, and Hazira, and PNG adoption started decades ago. In the last two decades, we have seen significant PNG adoption, and the main reason is the state govt's policy, which has supported the growth of PNG connections. The pipeline network is key infrastructure, and the state enabled it widely in the last two decades. Also, 70% of the country's imported gas lands at Gujarat ports, which also plays an important role. It is user-friendly, so people have adopted this quickly in Gujarat because of infrastructure availability, and in new buildings in cities, gas connection has become a new normal." Sources said that PNG adoption has been slower in the country than expected, and the govt is taking various steps to increase the share of gas as fuel in the country's energy basket.
