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Imports

India to Suspend Russian Crude Imports Amid US Sanctions

Strategic Insights

— 1 min read

India's Reliance Industries and state-run refiners are preparing to halt Russian crude imports following the US government's sanctions on Rosneft and Lukoil. The move will significantly impact Reliance, which imports most of its crude from Rosneft under a term contract. Russian oil accounts for nearly half of the feed at Reliance's 35-million-tonne Jamnagar complex. The US sanctions will make it harder for Nayara Energy, a 50-50 joint venture between Rosneft and the Indian government, to operate its 20-million-tonne refinery in Gujarat. Analysts warn that selling products from the refinery will be challenging due to the current market conditions.

Key Takeaways:

  • Reliance Industries is expected to be the biggest loser due to the suspension of Russian crude imports, as it buys most of its crude directly from Rosneft under a term contract.
  • Russian oil makes up about half of the feed at Reliance's 35-million-tonne complex at Jamnagar.
  • Nayara Energy, a 50-50 joint venture between Rosneft and the Indian government, will struggle to operate its 20-million-tonne refinery in Gujarat due to the US sanctions.
  • Indian Oil, one of the largest consumers of Russian oil among state-run refiners, sources 15-18% of its crude basket from Russia.
  • Analysts predict that the suspension of Russian crude imports will lead to a shortage of alternative supplies, resulting in higher benchmark prices and premia on other crude.
  • The US sanctions will also impact margin due to the increased cost of crude imports.

Statistics:

  • 34% of India's crude has been sourced from Russia so far this year.
  • Rosneft and Lukoil supply nearly 60% of India's Russian crude imports.
  • The US sanctions will prevent Rosneft and Lukoi from exporting crude to the US, making their oil "tainted" after the cut-off date.
  • Benchmark Brent crude price shot up 5%, or by $2.9 a barrel, to $65.50 on Thursday.
  • Indian Oil's crude basket from Russia makes up 15-18% of its total crude imports.

Sources:

  • Reuters: A Reliance spokesman told Reuters
  • Reuters: A senior executive of IndianOil
  • This article: Information not specified in the original article was not included.

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