With the Donald Trump administration slapping sanctions on two major Russian oil firms – Rosneft and Lukoil – refiners in India are reviewing their oil contracts. State-owned refiners are reportedly examining their documents for Russian oil procurement to verify that none of the supplies will be sourced directly from Rosneft or Lukoil following the US sanctions imposed on these entities.US President Donald Trump announced sanctions against Russia related to the Ukraine war for the first time during his second term on Wednesday. The sanctions targeted oil companies Rosneft and Lukoil – a move that clearly shows that his displeasure with Russian President Vladimir Putin regarding the Ukrainian conflict has intensified.
Meanwhile, on Tuesday, Trump again claimed having a conversation with Prime Minister Narendra Modi indicating that “he’s (Modi’s) not going to buy much oil from Russia”. Trump’s claims suggest that PM Modi had provided assurances about India reducing its Russian oil imports without completely halting them.At a White House Diwali celebration, Trump said, “We just have a very good relationship… He wants to see that war (between Russia & Ukraine) end as much as I do”. He further added, “So they have cut it (oil purchases) way back, and are continuing to cut it way back…”Modi acknowledged the President’s call in a social media post but did not mention any discussion about limiting Russian oil purchases.Also Read | ‘Putin wasn’t honest’: Trump imposes heavy sanctions on Russian oil firms
US sanctions on Russia oil firms: What does it mean for India?
According to Wednesday’s sanctions announcement, the US Treasury has established November 21 as the deadline for companies to conclude their dealings with these Russian oil producers.According to a Reuters report, government-owned refiners in India, including Hindustan Petroleum Corp, Bharat Petroleum Corp, Indian Oil Corp, and Mangalore Refinery and Petrochemicals, are scrutinising shipping documentation for Russian crude deliveries. Their focus is on verifying that shipments do not originate directly from Rosneft or Lukoil, according to the Reuters report quoting sources.Industry sources quoted in the report said that the government refiners traditionally do not purchase Russian oil directly from Rosneft and Lukoil. They instead conduct transactions through intermediary parties.India emerged as the main buyer of discounted Russian seaborne oil after Western nations stopped procuring Russian oil after the Russia-Ukraine war began in February 2022.Between January and September this year, India’s Russian crude oil imports averaged approximately 1.7 million barrels daily. Private sector refiners Reliance Industries and Nayara Energy got the majority share.
How much Russian crude does India import?
India is the world’s third-largest oil-importing and consuming nation and it depends heavily on overseas supplies. India’s oil imports fulfill 87 per cent of its daily consumption of approximately 5.5 million barrels.Previously, India sourced about 66 per cent of its crude oil needs from Middle Eastern countries, with Iraq, Saudi Arabia and the UAE being the primary suppliers.When Russia faced sanctions from Western nations, India began procuring more Russian oil at discounted prices.A crucial factor driving the decision for higher procurement was about being able to get discounted oil at a considerable price benefit. The discounts, which to begin with were as high as $19-20 per barrel in 2023, have now reduced to $3.5-5 per barrel.Consequently, Russia’s share in India’s total oil imports increased substantially from 1.7 per cent in 2019-20 (FY20) to 40 per cent in 2023-24, making Russia India’s main oil supplier.India’s considerable reliance on Russian oil, cannot be abruptly discontinued, according to a recent analysis by global trade analytics firm Kpler cited by PTI. A progressive reduction in imports appears to be the most practical approach, as per Kpler’s assessment.
