US Sanctions on Russian Oil: Indian Refiners Turn to Middle East Amid Supply Disruptions

International International News

Posted by NewAdmin on 2025-01-23 13:29:01 |

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The recent U.S. sanctions on Russian oil have significant implications for India's crude oil imports, which have surged since the onset of the Russia-Ukraine conflict. The sanctions, announced by the Biden administration, target 183 vessels involved in transporting Russian oil and major oil companies like Gazprom Neft and Surgutneftegas. This move aims to curtail Russia's revenue from oil exports, which are perceived as financing its military actions in Ukraine.

As a result of these sanctions, Indian refiners are struggling to secure sufficient cargoes of Russian oil for March deliveries. Bharat Petroleum Corporation Ltd (BPCL) has reported difficulties in obtaining enough Russian crude, with its share in overall imports expected to drop significantly from 31% to 20%. Industry officials maintain that while crude availability globally is not an issue, the attractive discounts previously offered by Russian suppliers may no longer be available.

Indian refiners are now looking to Middle Eastern suppliers to fill the gap left by reduced Russian imports. They are seeking long-term contracts and additional spot market cargoes from traditional suppliers such as Iraq and Saudi Arabia, as well as exploring options from Africa and the U.S. The sanctions have raised concerns about inflation in India, particularly as the country relies heavily on imported oil to meet over 85% of its consumption needs.

Experts predict that while long-term contracts with Russia may remain unaffected, spot purchases—which account for 40-45% of India's oil imports—will be impacted. The inability to pass on increased crude costs to consumers due to price freezes on petrol and diesel further complicates the situation for Indian Oil Marketing Companies (OMCs). 

Despite these challenges, analysts believe that India will navigate this transition without severe disruptions. The government has indicated that existing contracts for Russian oil booked before January 10 can still be fulfilled until March 12, allowing some time for adjustments.

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