India May Breach Russian Crude Oil Cap If OPEC+ Cuts Are Too Costly: FM Nirmala Sitharaman

When asked if India would continue importing Russian oil beyond the $60-a-barrel price cap, Nirmala Sitharaman said, "Yes, because otherwise, I’ll end up paying far more than what I can afford."

Finance Minister Nirmala Sitharaman in an interview in the US indicated that India will explore buying Russian crude oil near or past the price cap set by the G7 countries. This after OPEC+ in a surprise announcement earlier this month cut the crude oil output by more than 1 million barrels per day.

When asked if India would continue importing Russian oil beyond the $60-a-barrel price cap, Nirmala Sitharaman told Bloomberg on Saturday, "Yes, because otherwise, I’ll end up paying far more than what I can afford. We have a large population and we also, therefore, have to look at prices which are going to be affordable for us."

India has agreed with the Western powers to impose a price cap on Russian oil.

The Finance Minister also said that India needed to constantly look for the 'best deal' since it imports almost 80 per cent of its crude oil requirements. She cited the risk of higher oil prices and the impacts of Russia’s war in Ukraine as the biggest threats to India’s economic growth.

Meanwhile, the countries Russia's oil imports jumped to the highest level in almost three years in March this year in spite of Western sanctions. Russia's crude import rose by 100,000 bpd to 5 million bpd. 

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Bloomberg report said that India's stance underlines the urgent necessity to reduce inflation and promote growth in the face of an unexpected output cut by OPEC+ and Western sanctions. India has become one of the major consumers of Russian crude, along with China. It now ranks above Saudi Arabia and Iraq as India's biggest supplier. 

The impact on fuel prices of OPEC+’s output cut and “the spillover of all the decisions” related to Russia’s war in Ukraine are “the two main things which I think I’d be more worried about than anything internal,” she said.

However, In the past, government officials have said that the country is unlikely to breach sanctions on Russia. 

“I think we should look at it more with humanity in mind. I hope the intent is not to hurt economies which have nothing to do with the war.” Sitharaman said.