Russian Oil Exports to India Drop Amid US Sanctions
US sanctions on Russian oil companies like Rosneft and Lukoil have sparked a significant decline in Russian oil exports to India. Recent data shows that oil shipments to India dropped from an average of 1.95 million barrels per day (bpd) to just 1.19 million bpd in the last week of October. This change has raised concerns among Indian refiners, prompting companies like HPCL-Mittal Energy to suspend Russian oil imports.
The situation is evolving, with refiners such as Indian Oil Corporation stating that they will comply with international sanctions, although they have not explicitly commented on the future of their Russian oil imports. Reliance Industries, which accounts for a substantial portion of India's Russian oil imports, is assessing the implications of these sanctions and intends to comply fully with any guidance from the Indian government.
As Russian oil makes up about 35% of India’s total oil imports, the recent drop in exports is worrying for the country, which relies heavily on imports to meet its energy needs. Industry experts predict that Indian refiners may still source some Russian oil through intermediaries, albeit with a more cautious approach. The sanctions are likely to prompt refiners to look for alternative sources, increasing procurement from West Asia, Latin America, and North Africa.
The US has implemented these sanctions as part of its strategy to pressure the Kremlin amid the ongoing war in Ukraine. This move marks a significant escalation, as India has traditionally avoided oil imports from countries like Iran and Venezuela, which have faced similar sanctions. The potential threat of secondary sanctions from the US is a key reason why Indian companies are likely to tread carefully.
Despite these challenges, experts believe that a complete halt to Russian oil imports is unlikely. The attractiveness of Russian oil margins and India's geopolitical stance may allow for continued imports, although through more complex trading and logistical arrangements. The expectation is that Russian oil deliveries will remain robust until the November deadline set by the US for winding down dealings with sanctioned companies.
In conclusion, while the sanctions pose significant challenges for Indian refiners, the overall demand for Russian oil is expected to continue, albeit in a modified manner. As refiners adapt to the changing landscape, they will likely explore a broader range of import options to ensure energy security for the country.
