Sanctions Shake-Up: India's Oil Import Strategy Amid Russian Restrictions

Indian refiners are strategizing to adjust their crude oil imports following recent US sanctions targeting Russian producers Rosneft and Lukoil. These sanctions, effective from October 22, prevent American entities and individuals from engaging with the sanctioned companies. The move is forcing Indian firms to seek alternative oil sources to circumvent potential penalties, stated Sumit Ritolia, a lead analyst at Kpler.

As Russia supplies nearly a third of India’s crude imports, refiners are now eyeing the Middle East, Latin America, and the United States for increased procurement. Notably, Reliance Industries and Nayara Energy, major importers of Russian oil, face immediate challenges to adjust supply chains while avoiding US sanctions. Analysts express concerns about potential increases in India’s import bill due to the higher freight costs involved in securing new sources.

Experts predict that Indian refiners will lean towards sourcing Russian oil through intermediaries to maintain some continuity. Financial challenges aside, the ability of India’s refineries to process diverse crude grades might ease operational shifts. However, industry professionals acknowledge that unless further sanctions directly target Indian refiners, Russian crude will continue entering Indian ports, albeit through more intricate logistics and financial arrangements.