India to ensure no breach on Russia oil purchase sanctions

India will not breach Western sanctions on Russia including the price cap of $60 imposed on purchases of oil from Moscow, according to people familiar with the matter.

Government authorities have asked banks and traders to adhere to the rules, the people said, declining to be identified as the information isn’t public. Indian officials have not gone on the record to say they will support sanctions and the price cap imposed by the Group of Seven nations on Russia.

India had a detailed discussion with the US and other G-7 nations on the sidelines of the Group of 20 nations meeting recently and they seem satisfied with its dealings, one of the people said. India and China have emerged as the top buyers of Russian oil since its war in Ukraine began more than a year ago.

Spokespeople for the government didn’t respond to text messages seeking comments on the issue outside of working hours.

Over the past months, import-dependent India has seized the opportunity presented by discounted crude, becoming a key tool for Prime Minister Narendra Modi’s bid to fight energy inflation. A little over a year ago, it bought almost no Russian oil; today, the South Asian market has become crucial for Moscow, which in turn has displaced other suppliers.

India’s commitment to stick to the price cap and to continue buying crude from Moscow comes amid concerns future flows could be temporarily dented after financiers wary of breaching sanctions demanded more details on purchases.

Western countries led by the US had put a price cap of $60 per barrel on exports of Russian oil in a bid to crimp revenues to the Kremlin and keep some oil on the market. 

Earlier this month, a senior US official said the Biden administration will continue to discuss India’s purchases of Russian oil with government officials but is satisfied so far that New Delhi is buying the crude well below a western price cap.