The West’s unilateral stance to take down Russian oil exports does not seem to perturb Hardeep Singh Puri.
The European Union and G7 nations have decided to cap the price of Russian seaborne crude oil at $60 per barrel as of Dec. 5. However, the decision is unlikely to impact India, as its exposure to Russian crude oil is minimal, the Union Minister of Petroleum and Natural Gas told BQPrime.
“Russia is not our top supplier of oil; our traditional top suppliers are Iraq, Saudi Arabia, and the UAE,” Puri said. On the other hand, the OPEC+ meeting on Dec. 4 will consider further cuts in crude oil production to revive falling prices.
In FY22, India imported 53% of its oil from these countries. In FY23, between April and September, 52% of India’s crude oil imports came from these countries, Puri said.
“I would say that India does not fear that the West’s proposed price cap could constrain shipping and impede the flow of Russian oil. I have no anxiety about that, and I am sure the market will deal with it,” Puri added.
However, the minister noted that if Russia refuses to sell crude oil at the capped price or cuts down production, it will affect the global supply chain, putting pressure on producing countries to meet the global energy demand, resulting in a spike in crude oil prices.
It is important to appreciate the global scenario under which the world is operating. Russia exports close to 4.5 million barrels of oil per day, which is roughly 5% of global production.
“We have a situation where two major producers—Iran and Russia—are under some form of sanctions and one major consumer, China, is under lockdown. The producers, OPEC+, have decided to cut supplies in their last meeting, so the markets are in a state of flux,” Puri said.
It is likely the crude oil price will increase to $200 per barrel when three major oil producers are out of the market for some reason, Puri said. Given the tight oil markets at present, it is important to ensure supply stability.
The government is making all possible efforts to navigate the global energy challenges, insulating the developing economy from the rising global crude and gas prices, Puri said.