Russian oil supplies to major Indian refineries, which have been a boon for the economies of both countries for the past three years, are expected to drop to virtually zero after the US imposed sanctions against oil giants PJSC Rosneft and PJSC Lukoil, Bloomberg reports, writes UNN.
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Refinery executives said that the latest restrictions announced by Washington the day before, which blacklisted the largest Russian producers, virtually rule out the possibility of continued supplies.
According to analytics firm Kpler, India purchased just over 36% of its imports from Russia this year. This has been a major irritant for US President Donald Trump and a stumbling block in trade negotiations after punitive tariffs came into effect in August.
Historically, India has not been a significant importer of Russian crude oil, relying more on the Middle East. The situation changed in 2022 after Russia's invasion of Ukraine and the G7's imposition of a $60 per barrel price cap, designed to limit the Kremlin's oil revenues while maintaining global supplies. India avoids oil supplies from sanctioned Iran and Venezuela, but Russian supplies were allowed and relatively inexpensive, so purchases surged, the publication writes.
The latest move by the Trump administration, which had previously refrained from imposing major sanctions despite public criticism of Indian Prime Minister Narendra Modi, directly affected oil supplies from major Russian companies and effectively ended this trade just as Indian refinery executives return to work after the Diwali holiday.
The only exception could be the Indian oil refining company Nayara Energy, supported by Rosneft. It operates exclusively on Russian oil after the EU sanctions came into force in July.
In the short term, the latest sanctions, as the publication notes, will lead to orders that are to be placed within the next week - for oil to be shipped in November and delivered in December - now coming predominantly from other countries. Negotiations for spot supplies of Urals oil have stalled since mid-October, when Trump said Modi had promised to stop buying Russian oil, making buyers reluctant to take large positions.
"With these sanctions, Indian refiners may have to retreat much faster," said Vandana Hari, founder of analytics firm Vanda Insights. India, which did not buy Russian oil three years ago, will likely have an easier time than China, the publication points out.
India is the largest buyer of seaborne Russian oil, but the sanctions have also caused a major shock at the heart of China's oil industry.
"This is certainly one of the most significant measures taken by the US, but I think its effectiveness will be mitigated by the widespread use of illicit financial networks," said Rachel Ziemba, an analyst at the Center for a New American Security in Washington. "So it all depends on whether China and India fear further escalation of secondary sanctions."
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