How has Indian petroleum sector been affected by Russia-Ukraine war ?

The war between Russia and Ukraine has severely hampered growth prospects for many countries including India which is entirely dependent on import of oil. It has created a nightmare for Europe which is heavily dependent on Russia for natural gas imports. Russia accounted for 20-40 per cent of EU's oil, gas and coal consumption in FDY 2021. Apart from Europe, Indian oil marketing companies are finding hard to source oil due to import constraints and western sanctions against Kremlin. OPEC basket crude oil price was at USD 92.5 per barrel on 18 February 2022 just before Russia invaded Ukraine and went up to USD 133.13 per barrel on 8 March 2022.
Post Covid-19 economic recovery twinned with increased oil and natural gas prices has  only further push oil and gas import bill significantly. Also, rising crude and oil prices will critically affect inflation which as of July 2022 stood at 7 per cent which is way above RBI( Reserve Bank of India) limit of 4 per cent. India's domestic crude oil production plunged from 35.9 Million Metric Tonnes( MMT) in FY 2014-15 to 29.1 MMT in FY 2020-21. Petroleum products exported in FY 2021 was 1,907.94 billion Indian rupee which was 34 per cent lower compared to FY 2020. Indian oil companies are facing brunt of rising crude oil prices globally and to mitigate that it is keen on buying discounted Russian oil to secure its energy needs despite sanctions imposed on Russia. 
India imported 0.74 Million Barrels per day from Russia, being second only to Iraq in June 2022 whereas Russia accounted for a mere 0.06 Million Barrel per day in FY 2021. In order to avoid any payment default, Indian oil companies are looking to work on Ruble-Rupee mechanism to make payments. Indian government is fully aware of the weaknesses the petroleum value chain faces today and has started to work on exploring new oil fields apart from augmenting the existing production capacity.  Picture2_import.jpg


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