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India has not committed to and is not obligated to buy Russian crude oil only below the $60 price cap of the Western nations, a source at the Indian oil ministry told Reuters on Tuesday.
Russia has been redirecting most of its crude oil exports to China and India since the EU and the G7 announced plans to embargo seaborne oil imports from Russia and set a price cap on the crude if it is to be shipped to third countries using Western tankers and insurers.
India does not have any agreement signed with the West to follow the G7 price cap, the source told Reuters today.
India is not abiding by the G7 price cap as it seeks opportunistic purchases of cheap crude.
Still, the West believes that the price cap is benefiting the two large Asian oil importers, China and India, with bargaining power to negotiate steep discounts from Russia, with traders covering shipping costs. The U.S. and the EU consider the increased leverage of China and India in driving a hard bargain for Russian oil as a success of the price cap policy.
From a negligible buyer of Russia's oil before the Russian invasion of Ukraine, India has become a key export market for Moscow and is importing record volumes of Russian crude.
Russia supplies at present, around 35% of India's total oil imports, in stark contrast to less than 1% before the Ukraine war. Based on data provided by consultancy Vortexa, India imported around 1.62 million barrels per day (bpd) in February from Russia—a new record-high.
India will buy the oil it consumes from "wherever we have to" if the economics are beneficial for the country, Indian Oil Minister Hardeep Singh Puri told CNBC last month.
"Today we feel confident that we'll be able to use our market to source from wherever we have to, from wherever we get beneficial terms," the minister said.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com