Indian refiners have suspended new orders for Russian crude, Reuters has reported, citing unnamed sources as saying the industry awaited clarity from the government about navigating the new U.S. sanction context.
Reliance Industries, one of Rosneft’s biggest clients in India, has turned to the spot market for crude oil deliveries, while Indian Oil has launched a tender for oil cargos.
“We have not placed orders yet for fresh cargoes and have cancelled some that were booked from traders with links to the sanctioned entities,” one of the Reuters sources said.
“We need to ensure that our purchases are not linked to sanctioned entities as banks will not facilitate payments,” another told the publication.
The developments follow President Trump’s latest round of sanctions against Russian energy majors, targeting Rosneft and Lukoil, which together account for about 50% of Russia’s total oil exports, which, in turn, average some 4 million barrels daily.
Russian crude accounts for a third of India’s oil imports. The country turned from a minor supplier into the subcontinent’s top oil seller as the barrage of sanctions that the West leveled at Moscow prompted discounts that significantly reduced India’s import bill. The country depends on imported oil to cover as much as 85% of its demand, which makes it extra-sensitive to price fluctuations.
With the latest sanctions, however, Indian oil buyers are looking for alternatives, despite several statements from senior Indian officials, including Prime Minister Narendra Modi, that energy security rather than geopolitics continues to be the guiding principle of foreign commodity buying.
Even before the latest sanctions came into effect, Indian refiners had started diversifying their sources of crude, in anticipation of possible escalation from the Trump administration. Still, completely replacing Russian barrels with other supply will likely be challenging financially.
By Irina Slav for Oilprice.com
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