Halting Russian oil imports will jack up international crude prices: Govt

The government on Wednesday said that India's legitimate energy transactions cannot be politicised, alleging that there is an orchestrated campaign to sensationalise routine purchase of crude oil by Indian companies from Russia.

The Ministry of Petroleum and Natural Gas, in a press statement, says that Indian energy companies have been sourcing supplies from Russia, on a sustained basis, over the past several years.

"If suddenly, now, as a huge importer of crude oil, India pulls back on its diversified sources, concentrating on the remaining, in an already constrained market, it will lead to further volatility and instability, jacking up international prices," the ministry says, adding that yearly figures may have varied due to variety of reasons, including operational necessities.

The government also cautioned that many countries in the immediate neighbourhood are facing severe fuel shortages and chaos due to high fuel inflation at the current price levels of crude oil.

India has been constrained to pay ever increasing prices charged by certain oil suppliers, which is leading India to diversify its sources of procurement, it adds.

This comes at a time when India's energy needs are enormous with daily consumption of around 5 million barrels and a refining capacity of 250 million metric tonnes per annum (MMTPA).

"For energy security and to fulfil its objective of providing energy justice to each of its citizens, Indian energy companies buy from all major oil producers in the world. On an average, India has the unique distinction of servicing 60 million visitors at its petrol pumps every single day. Despite challenging times, it is important for the government to ensure access to affordable energy to our citizens," the ministry says.

India's top 10 import destinations are mostly from West Asia. In the recent past, the US has become a major crude oil source for India, supplying almost $13 billion worth of energy imports, with almost 7.3% of market share of crude oil imports.

Despite attempts to portray it otherwise, energy purchases from Russia remain miniscule in comparison to India's total consumption, the government says.

The Reserve Bank of India (RBI), after its unscheduled monetary policy meeting, warned that global crude oil prices, which continue to hover above $100 per barrel, could lead to "another round of price increases for processed food, non-food manufactured products and services". The banking regulator hiked the repo rate by 40 basis points to address concerns about rising inflation.

The Russia-Ukraine conflict, according to RBI, has dampened the momentum of recovery, with its impact transmitting through record high commodity prices, weaker global growth outlook and tighter global financial conditions.