The Shift in India's Crude Oil Strategy
Indian state-backed refiner HPCL-Mittal Energy has decided to stop buying Russian crude oil following the imposition of sanctions by US President Donald Trump on Moscow’s two biggest oil companies. This move comes as tensions between Washington and New Delhi have escalated, particularly after Trump increased tariffs to 50 percent. US officials have accused India of supporting Russia’s war in Ukraine by purchasing discounted oil from Moscow.
Trump has claimed that Indian Prime Minister Narendra Modi has agreed to reduce its imports of Russian crude as part of a potential trade deal with the US. However, this claim has not been confirmed by New Delhi.
HPCL-Mittal Energy Limited (HMEL), which is a joint venture between steel tycoon Lakshmi Niwas Mittal and state-run Hindustan Petroleum Corporation Ltd (HPCL), stated it had "taken the decision to suspend further purchases of Russian crude." The company released this statement on Wednesday, explaining that the decision was made after recent announcements of new restrictions on importing crude oil from Russia by the United States, European Union, and United Kingdom.
The statement emphasized that HMEL's business activities align with the Indian government's energy security policies.
Reliance Industries' Response
Reliance Industries, the main private buyer of Russian crude in India, mentioned that it is currently evaluating the impact of Washington's restrictions, as well as those introduced by the European Union this week. A spokesperson for the company said they would comply with the EU’s guidelines on importing refined products into Europe, as well as any directives from the Indian side.
The European Union's new measures include a complete ban on Russian liquefied natural gas (LNG) imports by the end of 2026. Reliance expressed confidence that its "time-tested, diversified crude sourcing strategy" would ensure stable refinery operations to meet domestic and export demands, including to Europe.
Controversy Over Shipments
On Wednesday, an investigation by London's Financial Times revealed that HMEL had received several shipments of Russian crude transported via vessels that were later blacklisted under US and EU sanctions. HMEL clarified that it did not charter these vessels and had limited visibility over the transport chain. It also noted that the ship delivering the crude to India was not under US sanctions at the time of delivery.
India, one of the world's largest crude oil importers, depends on foreign suppliers for more than 85 percent of its oil needs. Traditionally, the country relied on Middle Eastern producers. However, in 2022, New Delhi began purchasing heavily discounted Russian crude, taking advantage of Western sanctions that restricted Moscow's export options.