Indian Refiners Pivot Away From Russian Oil
Oil prices are little changed this week; After the US reached an agreement on oil prices, the downward trend continues to dominate the markets. one year ceasefire It continues its trade war with China despite reports that Indian refiners are abandoning Russian oil in the wake of new US sanctions. Brent crude oil December delivery was trading at $65.07/bbl at 14:22 on Friday, down slightly from a week ago, at $66.48/bbl. WTI The contract was changing hands from $61.95/barrel to $60.92/barrel.
Last week, the Trump administration announced new sanctions Russia’s oil and gas giants Rosneft and Lukoil were targeted just days after Britain announced similar sanctions. Previously, Trump had threatened to take harsh measures against Moscow for not signing a peace agreement with Ukraine, but he refrained from carrying out his threats. And now there are reports that Indian refiners are avoiding Russian oil in favor of pricier US and Middle Eastern grades to avoid Trump’s wrath.
For the past three years, India has been benefiting from cheap Russian crude oil, often offered at discounts of $8 to $12 per barrel compared to Middle Eastern benchmarks. Russia has consistently been India’s largest supplier since mid-2022; India purchased around 1.75 million barrels per day from Russia, largely from Lukoil and Rosneft. India generally imports 86% of the oil it consumes. However, recent US sanctions targeting the shipping, insurance and trading networks that Indian refiners leverage to buy Russian oil on a large scale have narrowed these discounts and increased transaction risks; This made Russian oil much less attractive.
In addition, sanctions made banks more careful about payment channels. As a result, the share of Russian oil in India’s import basket fell from 36% in the previous two years to 34% this year. By contrast, US crude imports to India rose to 575,000 barrels per day in October, the highest level in three years, signaling a deliberate turnaround. India will now have to deal with higher energy bills,”Crude oil prices have risen sharply following new sanctions on Russia’s leading oil companies, sparking fears of tightening supplies and renewed inflation concerns. This could negatively impact India as higher crude oil prices could widen the fiscal deficit and strain the import bill.Geojit Investments Research Manager Vinod Nair said:
Commodity analysts at Standard Chartered predict that the course of the oil price will be determined by the amount of Russian barrels withdrawn from supply in the wake of sanctions. Rosneft and Lukoil exported 1.9 million barrels per day (mb/d) of crude oil by sea last year; most of this happened to India and China. China also imported approximately 800 thousand barrels per day (kb/d) of crude oil from Rosneft through the pipeline.
