Due to their substantial discounts, experts predicted that India will soon expand its purchases of crude oil from those Russian energy businesses that are not subject to US sanctions.
India May Boost Imports
Non-sanctioned Russian companies are giving discounts of up to $5–$6 a barrel. They claim that as a result, Indian refiners would probably witness a rise in imports from such businesses.
In the next months, India could begin importing 0.8–0.9 million barrels per day (Bpd) of crude oil from Russia’s non-sanctioned companies, according to Prashant Vashisht, Senior Vice President, Icra.
According to real-time monitoring and analytics company Kpler, Russian crude oil exports to India fell sharply in November to around 948,000 barrels per day (bpd), an almost 50% decrease from 1.89 million Bpd in October. About 35% of India’s total imports in October came from Russian crude oil.
Nayara Sole Russian Importer
Nearly 1.1–1.2 million Bpd of the 1.89 million Bpd of oil that India bought came from the two sanctioned companies, Rosneft and Lukoil. After the US sanctions against Rosneft and Lukoil began on November 21, analysts claim that all Indian refiners—aside from Nayara Energy—have almost completely ceased importing crude oil from these two businesses.
Analysts estimate that Nayara Energy continues to buy over 400,000 Bpd of oil from Russian companies, notably Rosneft. Indeed, Rosneft has a 49.13% share in the business.
In an effort to put pressure on Russia’s energy sector and compel it to withdraw from Ukraine, the US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned the country’s two biggest oil corporations in October.
Secondary Sanctions Reduce Imports
The OFAC notice included a clear warning that secondary penalties, which would target people who continue to purchase Russian crude oil from these firms, would be considered in the near future. China, India, and Turkey have cut down on Russian imports because of this concern.
The real-time crude oil data-analytics company Kpler said in a December 2nd report that “India and China will continue to import Russian oil until more sweeping secondary sanctions are enacted.”
Russian barrels are still quite cheap, and there will probably be ways to keep the shipments going. According to the report, which was written by Johannes Rauball, Senior Crude Oil Analyst at the Kpler, “buyers may increasingly turn to non-sanctioned Russian firms and opaque trading methods.”
Refiners Shift Risk Strategy
According to Rauball, in order to reduce OFAC risk, refiners would probably move more carefully and depend on mixed barrels, unsanctioned dealers, and more intricate logistics. “Russian supplies will continue to flow via murky ways, but it will not go away.”
He said that recent tanker activity indicates a significant change in Russian crude trade behavior, characterized by mid-voyage diversions between China and India and Ship-to-Ship (STS) transfers in odd places, such off the coast of Mumbai, far from the traditional transfer zones around the Singapore Strait.
