New US sanctions threaten to disrupt India's Russian oil lifeline

While India's imports of Russian crude oil are set to decline due to new US sanctions, the complete halt of these imports is unlikely. The situation remains fluid as refiners adapt to new supply channels and the enforcement of sanctions.
New US sanctions threaten to disrupt India's Russian oil lifeline

Key insights

  • 1

    Significant drop in imports: India's Russian crude imports may fall to 400,000 bpd soon.

  • 2

    Refiners adjusting supply chains: Indian refiners are exploring non-sanctioned channels for oil.

  • 3

    Impact of US sanctions: New sanctions target specific companies, not all Russian oil.

  • 4

    Future uncertainty: The trajectory of Russian oil imports remains unclear.

A What happened
India's imports of Russian crude oil are anticipated to decline significantly due to new US sanctions that took effect on November 21, targeting major Russian oil exporters like Rosneft and Lukoil. These sanctions have transformed crude linked to these companies into a 'sanctioned molecule,' prompting Indian refiners to reassess their supply strategies. Although imports from Russia averaged 1.7 million barrels per day this year, analysts expect a drop to around 400,000 barrels per day in December and January. Despite this, Russian oil may still reach India through non-designated entities. The sanctions have already led companies like Reliance Industries to halt imports, while Nayara Energy remains dependent on Russian crude. The evolving situation creates uncertainty in India's energy supply, which has increasingly relied on Russian oil since the Ukraine invasion. The future of these imports will depend on how strictly sanctions are enforced and whether alternative supply routes can be established.

Topics

Business & Markets Economy World & Politics International Affairs Climate & Environment Energy

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