Indian Oil Complies with US Sanctions on Russian Oil

Indian Oil Corporation (IOC), the largest refiner in India, has announced its commitment to comply with the recent US sanctions imposed on Russian oil giants Rosneft and Lukoil. This decision comes in the wake of the US government tightening its grip on Russian oil exports as a response to the ongoing geopolitical tensions. With Russian crude making up 21% of IOC's overall oil import basket during the April-September period, this compliance could significantly impact India's crude oil imports.

IOC Chairman Arvinder Singh Sahney emphasized the company's adherence to international sanctions but refrained from discussing the future of Russian oil imports. Industry analysts suggest that this cautious stance reflects a broader trend among public sector refiners to avoid direct purchases from Rosneft and Lukoil, which together account for a majority of Russia's oil production and India's Russian oil imports.

While some Russian oil exporters remain unaffected by US sanctions, the overall volume of Russian oil reaching India is expected to decline. India has increasingly relied on Russian oil, with it accounting for over 35% of the country's total oil imports since 2025. However, private refiners like Reliance Industries (RIL) and Nayara Energy, which have deeper ties with Rosneft, face the challenge of navigating these new sanctions.

RIL, which imports a significant portion of its Russian oil through a term deal with Rosneft, is assessing the implications of the sanctions. The company has indicated its intention to comply fully with any guidelines from the Indian government. Although no formal guidance has been issued yet, RIL is likely to reduce its Russian oil imports swiftly to avoid potential secondary sanctions from the US.

The risk of secondary sanctions is a critical concern for Indian companies, which often have substantial dealings in the US dollar-denominated trade and rely on access to American financial markets. Given their investments in the US and long-standing relationships with American firms, Indian refiners cannot afford to be sidelined by the US financial system.

Historically, India has avoided oil imports from sanctioned countries such as Iran and Venezuela. This pattern is likely to continue with Russian oil from Rosneft and Lukoil. While the Indian government asserts that it will procure oil wherever it gets the best deal, the sanctions may lead to a significant reduction in the availability of Russian oil.

In light of these developments, Indian refiners are expected to diversify their sources of crude oil even further, increasing imports from regions like West Asia, Africa, and the Americas. The future of Russian oil imports remains uncertain, with both public and private sector refiners adopting a cautious approach as the geopolitical landscape evolves.