New Delhi, 23 Nov 

India’s imports of Russian crude oil the feedstock for fuels such as petrol and diesel are expected to drop sharply in the near term but not halt entirely as new US sanctions on Moscow’stop oil exporters take full effect, analysts said.

US sanctions on Rosneft and Lukoil, and theirmajority-owned subsidiaries, took effect on 21 November, effectively turning crude linked to these firms into a “sanctioned molecule”.

India’s crude oil imports from Russia,averaging 1.7 million barrels per day (bpd) this year, remained firm ahead of the cutoff, with November arrivals projected at 1.8 - 1.9 million bpd as refiners maximised discounted purchases. But flows are expected to drop noticeably in December and January, with analysts estimating near-term declines to around 4,00,000 bpd.

Traditionally reliant on Middle Eastern oil, India significantly increased its imports from Russia following the February 2022 Ukraine invasion.

Western sanctions and reduced European demand made Russian oil available at steep discounts. As a result, India’s Russian crude imports surged from under 1 per cent to nearly 40 per cent of its total crude oil imports within a short span. In November, Russia continued to be India’s top supplier, making up about a third of all the crude oil imported by the country.

“We expect a noticeable drop in Russian crude flows to India in the near term, particularly through December and January. Loadings have already slowed since 21 October, though it is still early for definitive conclusions, given Russia’s agility in deploying intermediaries, shadow fleets and workaround financing,” said Sumit Ritolia, Lead Research Analyst, Refining & Modelling, Kpler.

The sanctions have resulted in companies such as Reliance Industries, HPCL-Mittal Energy Ltd and Mangalore Refinery and Petrochemicals Ltd halting imports for now. The only exception is Rosneft-backed Nayara Energy, which is heavily dependent on Russian crude after supplies from the rest of the world were effectively cut off following European Union sanctions on it.

“Based on the current understanding, no Indian refiner, other than Nayara’s already-sanctioned Vadinar facility, is likely to take the risk of dealing with OFAC-designated entities, and buyers will need time to reconfigure contracts, routing, ownership structures and payment channels,” Ritolia said.

Sanctions announced by the US target specific companies, not all Russian oil or producers. This means that crude supplied by non-designated Russian entities for example, Surgutneftegaz, Gazprom Neft or independent traders using non-sanctioned intermediaries can still be legally purchased by Indian refiners, as long as no sanctioned entity, vessel, bank or service provider is involved.

“Russian oil itself is not sanctioned; the suppliers are. That is why non-designated producers can legally step in to fill part of the gap created by the restrictions on Rosneft and Lukoil,” he said.

Discounted Russian crude helped Indian refiners from public sector Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) to private sector Reliance Industries Ltd post bumper profits in the last two years. It also helped keep retail petrol and diesel prices stable despite volatility in the international market, on which India is 88 per cent dependent to meet its oil needs.

India’s crude oil import landscape is entering a period of sharp uncertainty as new US sanctions on top Russian exporters take full effect, forcing refiners to reassess Russian supply channels that have dominated their purchases for more than three years.

While Russian barrels will not disappear from India’s slate, flows are expected to decline sharply in the near term and grow more opaque as Moscow and Indian buyers adjust to tightening restrictions, analysts said.

Reliance Industries the world’s biggest buyer of seaborne Russian crude confirmed it stopped importing Russian oil into its 7,04,000 bpd export-oriented SEZ refinery on 20 November to ensure compliance with upcoming EU rules banning fuels derived from Russian crude.

From 1 December, all product exports from the Jamnagar SEZ unit will be derived exclusively from non-Russian crude. Reliance will, however, honour pre-committed Russian cargoes placed before the 22 October sanctions announcement, routing any post-deadline arrivals to its separate 6,60,000 bpd domestic-market refinery.

The company declined to clarify whether it would continue buying non-sanctioned Russian crude for the domestic facility, reiterating only that it would comply with all sanctions.

“In the longer term, the trajectory will depend on how strictly Western nations enforce secondary sanctions and whether further measures such as sanctioning all Russian barrels or penalising refineries that process any Russian crude are introduced,” Ritolia said.

Tighter enforcement would suppress volumes further, while lighter-touch implementation could allow some recovery through intermediaries.

“Overall, Russian crude flows are entering a phase of heightened uncertainty and volatility as the supply chain adapts. New trading intermediaries, alternative shipowners, evolving payment mechanisms, ship-to-ship transfers and a shift toward ‘clean’ (non-designated) sellers will all shape post-November trade,” he said.

Until refiners gain clarity on compliant pathways including secure non-sanctioned counterparties, shipping and insurance availability, and workable banking solutions India’s imports from Russia will remain in choppy waters, marked by short-term disruptions and frequent shifts in sourcing patterns, he added.