IOC Complies with US Sanctions on Russian Oil
In a noteworthy development, Indian Oil Corporation (IOC), the largest oil refiner in India, has announced its commitment to adhere to the sanctions imposed by the US on Russian oil giants Rosneft and Lukoil. This statement comes shortly after the US announced sanctions, indicating a shift in how India might approach its oil imports from Russia, which previously constituted 21% of IOC's oil import basket.
IOC Chairman Arvinder Singh Sahney emphasized their compliance with international sanctions but refrained from discussing the future of Russian oil imports. This cautious stance suggests that public sector refineries are likely to avoid direct purchases from Rosneft and Lukoil, which dominate Russian oil production and exports.
Despite these sanctions, some volumes of Russian oil may still reach India through other exporters not targeted by the US. Currently, Russia is a significant source of crude for India, accounting for over 35% of its total oil imports in 2025. Private sector refiners like Reliance Industries (RIL) and Nayara Energy, with ties to Rosneft, have been the primary importers.
RIL stated it is evaluating the implications of the sanctions and will comply with any guidance from the Indian government. However, the lack of formal guidance means that Indian refiners are in a wait-and-watch mode regarding their Russian oil purchases.
The possibility of secondary sanctions from the US poses a serious risk for Indian refiners. These sanctions could limit their engagement with Russian oil entities and impact their operations significantly, given their financial ties to the US.
Historically, India has been cautious in its oil dealings with countries like Iran and Venezuela, and industry experts predict a similar approach towards Russian oil now. The Indian government has consistently maintained that it will procure oil from the best sources, provided they are not under sanctions. However, these new sanctions could choke supplies to India, especially given Rosneft and Lukoil's significant shares in the Russian oil market.
While refiners may continue to buy Russian-origin crude through third-party traders, this avenue may also see a decline as the industry adopts a more cautious stance. The situation remains fluid, and with the US Treasury Department mandating that all transactions with Rosneft and Lukoil must cease by November 21, the future of Russian oil imports to India hangs in the balance.
In conclusion, Indian refiners are expected to diversify their crude oil sources further, reducing reliance on Russian imports amidst ongoing geopolitical tensions and sanctions that could reshape India's oil landscape.
