The Donald Trump administration’s latest move to sanction major Russian oil firms Rosneft PJSC and Lukoil PJSC will likely make it almost impossible for India to continue procuring crude from Russia. Analytics firm Kpler reports that Russian oil made up over 36% of India’s total imports in the current year. This substantial reliance has caused friction with President Donald Trump and complicated trade discussions following the implementation of punitive tariffs in August.While India avoids US-sanctioned oil from Iran and Venezuela, Russian oil remained both permissible and cost-effective, leading to increased purchases.Both India and Russia have benefitted from the rising crude oil trade between the two countries – but the procurement may now grind to a halt, with flows likely dropping to near zero levels in the coming months, according to a Bloomberg report.
India’s Crude Oil Imports From Russia To Stop?
Indian refiners anticipate a significant decline in Russian oil imports, potentially even reaching zero, following US sanctions on major producers Rosneft and Lukoil.According to refinery executives quoted in the Bloomberg report, the new restrictions announced by the US will effectively halt the oil flow. These sanctions specifically target Russia’s largest oil producers.
Russia has been India’s largest oil supplier since 2023
Prior to 2022, India’s oil imports from Russia were minimal, with the country primarily relying on Middle Eastern supplies. This pattern shifted following Russia’-Ukraine war and the G7 nations’ move to implement a $60-per-barrel price cap, designed to restrict Russia’s revenue while maintaining global oil supply. The Trump administration’s latest move has now specifically targeted oil shipments from Russian major suppliers. In the past the US has refrained from such significant sanctions.Also Read | Trump sanctions on Russia oil firms: Indian refiners reviewing contractsAccording to the report, one possible exception might be the Indian refiner Nayara Energy, which is backed by Rosneft. Since the time that the European Union sanctions came into effect in July, the company has been operating solely with Russian crude.The immediate impact of these new sanctions means that upcoming orders, scheduled for placement in the next week for November loading and December delivery, will now predominantly come from alternative sources, the Bloomberg report said. Since mid-October, when Trump claimed assurance from PM Modi on stopping Russian crude purchases, spot negotiations for Urals cargoes have already diminished, with buyers hesitant to make substantial commitments.“The Indian refiners might need to reduce their purchases more rapidly due to these sanctions,” explained Vandana Hari, who heads Vanda Insights, a Singapore-based market analysis organization. “India, which began purchasing Russian crude only three years ago, might find it less challenging to adjust compared to China,” Hari was quoted as saying.As a big purchaser of Russian seaborne crude, India’s position is significant, whilst the sanctions have also created substantial disruption within China’s oil sector.
Rosneft, Lukoil are India’s top Russian crude suppliers
“This represents one of the more significant actions by the US, though its impact may be reduced by the prevalent use of unofficial financial channels,” noted Rachel Ziemba, who analyzes at the Center for a New American Security in Washington. “The crucial factor will be whether China and India are concerned about potential intensification of secondary sanctions,” Ziemba told Bloomberg.According to a Reuters report, Indian state-run refiners are doing thorough reviews of their documentation related to Russian oil procurement. The aim is to ensure that there is compliance with US sanctions and that there are no direct supplies coming from Rosneft or Lukoil.Also Read | ‘Putin wasn’t honest’: Trump imposes heavy sanctions on Russian oil firmsThe Reuters report also indicates that state-owned refiners -Indian Oil Corp, Hindustan Petroleum Corp, Bharat Petroleum Corp, and Mangalore Refinery and Petrochemicals – are carefully checking their shipping records.Reliance Industries is also considering a reduction or possible a complete halt of its Russian oil imports, sources told Reuters.“Recalibration of Russian oil imports is ongoing and Reliance will be fully aligned to GOI (Government of India) guidelines,” a spokesperson from Reliance was quoted as saying.
