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India's State-Run Oil Refiners to Continue Importing Russian Crude Despite US Sanctions

Strategic Insights

— 1 min read

Despite fresh US sanctions on Rosneft PJSC and Lukoil PJSC, two of Russia's largest oil companies, India's state-run oil refiners are expected to continue importing Russian crude through intermediary traders. The sanctions target firms accused of helping fund the Kremlin's "war machine" in Ukraine. Industry sources told PTI that public-sector units (PSUs) are assessing compliance risks but are unlikely to halt Russian crude flows immediately.

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL), and HPCL-Mittal Energy Ltd (HMEL) do not have direct contracts with Rosneft or Lukoil. Instead, they buy Russian oil through tenders where traders based in Europe, Dubai, or Singapore participate. These traders have not been sanctioned by the US, and the EU sanctions have also not targeted these intermediaries.

Industry participants believe the latest US measures may have limited impact on Russian crude flows. The Trump administration's measures specifically target shipments from Russia's major oil suppliers, but markets appear unconvinced. International oil prices saw a $2 increase per barrel on news of the sanctions, implying that not all of the oil that is exported from Russia is going anywhere.

Key Takeaways:

  • India's state-run oil refiners, including IOC, BPCL, HPCL, MRPL, and HMEL, are expected to continue importing Russian crude through intermediary traders despite fresh US sanctions.
  • These traders are based in Europe, Dubai, or Singapore and have not been sanctioned by the US.
  • Indian Oil Corporation (IOC) does not have a direct contract with Rosneft or Lukoil, but instead buys Russian oil through tenders.
  • Reliance Industries Ltd (RIL), India's largest buyer of Russian crude, may face challenges with the new sanctions due to its direct purchases from Rosneft.
  • The Trump administration's latest measures specifically target shipments from Russia's major oil suppliers, but markets appear unconvinced.

Statistics:

  • India's 1.7 million barrels per day of Russian oil imports account for roughly half of India's total imports from Russia.
  • Rosneft PJSC is responsible for 6% of global oil output and nearly half of Russia's production.
  • US sanctions target firms that export around 3.1 million barrels of oil per day.

Sources:

  • Industry sources told PTI
  • PTI reports
  • Times of India (TOI) article by PTI Business Desk

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