New Delhi: State Bank of India (SBI) has asked oil refiners to provide data on purchasing prices to ensure India is not violating Western sanctions, supported by the G7, that put a price cap of $60 per barrel on Russian oil.
That means anyone who wants to buy Russian oil has to pay that price or less.
“SBI has asked for a break-up that confirms that Indian refiners are buying oil below the $60 per barrel price cap. They are doing it given the stringent sanctions under the OFAC [Office of Foreign Assets Control] of the US treasury department. The OFAC directive is agnostic about the currency in which the payments are made, including United Arab Emirates dirhams. As of now, there is no problem,” said a government official, one of the persons familiar with the matter requesting anonymity, told Mint.
“To mitigate the risk, India’s largest lender has requested data on purchasing prices from refiners such as Indian Oil Corp., Bharat Petroleum Corp. Ltd, and Hindustan Petroleum Corp. Ltd,” two people in the know of the matter, including the person cited above, told the business daily.
The price cap came into effect on December 5, 2022.
The development comes amid surging India-Russia oil trade, which reached a record 1.6 million barrels per day in February. Russian oil, in fact, comprised more than one-third of all imports in February, according to energy cargo tracker Vortexa, the Economic Times reported. Russia has also become the second-largest oil supplier to India after Iraq.
“The price cap has not been breached, and payments for Russian crude oil have been taking place. Had that been the case, the payments would have stopped,” a senior executive at an Indian state-run refiner, requesting anonymity, told Mint.
Separately, finance minister Nirmala Sitharaman has said that India will explore buying Russian crude oil beyond the price cap.
“Yes, because otherwise, I’ll end up paying far more than what I can afford,” the finance minister told Bloomberg in an interview on April 15 in Washington, when asked if India would continue importing Russian oil beyond the $60-a-barrel price cap.
“We have a large population and we also therefore have to look at prices which are going to be affordable for us.”