Russian Oil Imports to India Face Uncertainty
As the deadline for US sanctions approaches, Russian oil shipments to Indian ports have significantly declined. After a brief surge in deliveries, Indian refiners are now wary of engaging with sanctioned entities like Rosneft and Lukoil, which have historically supplied a large portion of India's oil imports. The sanctions, announced by the Trump administration, aim to pressure Russia to cease its operations in Ukraine.
Between November 1-20, Russian oil deliveries to Indian ports averaged 1.89 million barrels per day (bpd), an increase from 1.62 million bpd in October. However, the loadings designated for India plummeted by 50%, dropping from 1.87 million bpd in October to 0.98 million bpd. This drop is attributed to reduced dispatches from Rosneft and Lukoil, which together account for over half of Russia's oil production and exports.
Indian refiners are now navigating a complex landscape. The journey time for tankers transporting Russian crude can take up to four weeks, meaning much of November's oil could arrive after the sanctions deadline of November 21. This has led to a cautious approach among Indian refiners, who wish to avoid any cargoes that may be subject to US sanctions.
India’s relationship with Russian oil has always been sensitive, especially given the country’s heavy reliance on oil imports, covering about 88% of its requirements. In light of the sanctions, refiners are expected to increase purchases from regions such as West Asia, Africa, Latin America, and North America, potentially reshaping India's oil sourcing strategies.
Industry experts indicate that the flow of Russian oil is entering a phase of uncertainty and volatility. Companies and banks are likely to exercise caution to avoid secondary sanctions that could arise from engaging with sanctioned entities. The historical precedent shows that India has previously steered clear of imports from sanctioned countries like Iran and Venezuela.
Despite the challenges, there remains room for some Russian oil to enter India via non-sanctioned exporters and intermediaries. However, volumes will likely be lower than in previous years. As the situation evolves, Indian refiners must adapt to these sanctions while ensuring compliance with international regulations. The outlook for Russian oil imports into India remains uncertain, with potential disruptions and shifts in sourcing patterns on the horizon.
The coming weeks will be critical as refiners evaluate their options and seek to understand the implications of the sanctions for their operations. The future will heavily depend on how Western nations enforce these sanctions and the responses from Indian entities navigating this challenging landscape.
