‘We cannot stop buying Russian oil’:Says Sitharaman as Trump prepares to levy up to 100% tariffs

Union Finance Minister Nirmala Sitharaman has made it clear that India cannot suddenly stop buying crude oil from Russia or immediately switch to other suppliers. She said this was necessary to meet the needs of 140 crore people. Speaking at the ‘BusinessLine Changemaker Awards’ on Tuesday, Sitharaman said that if India stopped buying oil from Russia, there would be a shortage of oil worldwide, which could cause crude oil prices in the international market to rise sharply. She acknowledged that while US sanctions and the new legislation present a serious challenge, the Government of India must prioritize the interests of its 1.4 billion or 140 crore citizens above all else. Trump’s New Law: Threat of 100% Tariffs Recently, US President Donald Trump signed the ‘Lindsey O. Graham Sanctioning Russia and Iran Act’ into law. Under this legislation, the US administration is authorized to impose tariffs of up to 100% on countries that engage in large-scale purchases of crude oil and gas from Russia and Iran. This new US law puts major economies like India and China at direct risk of being affected, as both nations are among the largest buyers of Russian crude oil. Oil Pool Already Shrunk Prior to Gulf Attacks Commenting on the current state of the global energy market, Sitharaman noted that recent geopolitical tensions in the Middle East and attacks on refineries in the Gulf region have already reduced the global supply of oil. She added: “If you look at it realistically, due to the attacks in Saudi Arabia and disruptions in other refineries linked to the Gulf region, the total pool of oil is naturally shrinking. In such a scenario, suddenly turning away from a major supplier would completely disrupt the balance of the global market.” Technical Constraints of Indian Refineries Explaining the practical difficulties of switching suppliers, the Finance Minister highlighted the technical design of Indian refineries. She pointed out that Indian refineries are primarily configured to process ‘medium crude’ (crude oil with a specific density and sulfur content). She explained: “Even if you find oil available elsewhere, if our refineries cannot process it even after minor modifications, what is the use of that oil to us? Whose interest are we serving then?” This indicates that the government cannot look at availability alone; it must also align purchases with domestic refining capabilities. Zelenskyy: “If India Stops Buying Oil, the War Will Stop” Meanwhile, Ukrainian President Volodymyr Zelenskyy has once again appealed to India and China to halt their energy trade with Russia. In an interview with The Wall Street Journal, Zelenskyy stated that Russia’s economy is heavily reliant on buyers like India, China, and Turkey. Zelenskyy said: “If these countries stop their energy trade with Russia, Russia will be forced to stop this war.” He also expressed hope that President Donald Trump would soon help bring an end to the Russia-Ukraine conflict. The Math of India-Russia Oil Trade Post-Ukraine War Before the Russia-Ukraine war broke out in February 2022, India imported less than 1% of its total crude oil requirements from Russia. However, after Western nations imposed sanctions on Moscow and Russia began offering steep discounts, India emerged as a major buyer of Russian crude. Despite facing continuous pressure from Western nations, India has consistently maintained its stance that its energy purchases are strictly driven by market dynamics and the country’s energy security requirements.