‘World is grateful’: India keeps oil prices cheaper by buying from Russia, Indian oil minister says

India keeps global crude prices affordable by buying oil from Russia, India’s energy minister said.

“The world is grateful to India for buying Russian oil. It’s not that they don’t want us to buy Russian oil,” India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri told CNBC’s Sri Jegarajah on the sidelines of the India Energy Week conference in Goa.

“If we start buying more of the Middle Eastern oil, the oil price will not be at $75 or $76. It will be $150,” he added.

Since Russia’s invasion of Ukraine in February 2022, India’s refiners have been snapping up discounted Russian oil.

Moscow has since become India’s leading source of crude oil, accounting for about 36% of the South Asian nation’s crude imports.

Consequently, India’s imports of Middle Eastern oil fell to a record low.

Oil prices have been under pressure in spite of rising tensions in the Red Sea and fears of a widening conflict in the Middle East. Such uncertainty would typically push energy prices higher but gains have been limited amid record output from the U.S., and an ongoing global economic slowdown.

The Indian minister said he was not “unduly worried” about whether there will be a spike in prices as a result of a lack of availability or affordability of the oil.

“The fact of the matter is half the work is in recession,” he said, adding that higher oil prices will invariably end up becoming a “self fulfilling prophecy” where higher prices will curtail demand.

India is expected to be the largest driver for growth in global oil demand from 2023 to 2030, the International Energy Agency said in a report Wednesday.

Prime Minister Narendra Modi has announced plans to boost the country’s annual oil refining capacity by almost 80% to 450 million tons, in what could possibly pose as another challenge to India’s renewables goals.

India has set an aspirational target of meeting 50% of its electricity demand from renewable sources 2030, and a 100% transition to renewable energy by 2050. Currently, 75% of the nation’s total power is derived from coal-fired plants.

That said, the minister said he was confident the renewable targets “will be met totally.” 

“We are well on the way of meeting our targets and we’ll meet them all before time,” he said, adding that many of India’s major oil companies have net zero targets at 2035 and 2040.