US Sanctions Hit India’s Russian Oil Supply; Imports Set to Drop Sharply

India's supply of Russian crude oil will be affected following the imposition of new US sanctions on November 21st on major Russian oil companies, such as Rosneft and Lukoil. According to experts, the sharp decline in the importation of Russian oil will continue for the next two months, although a complete halt is unlikely.

India imported 1.7 million b/d of Russian crude on average this year and is likely to raise that to 1.8-1.9 million b/d in November as refineries bought cargoes sold at a discount before sanctions kicked in. In December and January, imports are expected to fall to around 400,000 b/d. Following Western sanctions and declining European demand after the Ukraine war, Russia began selling oil to India at a steep discount. As a result, India's Russian oil imports increased from 1% to nearly 40% of total crude oil imports, and Russia remained India's largest supplier in November.

Following the new sanctions, several Indian refineries have temporarily halted purchases of Russian oil. Reliance Industries, HPCL-Mittal Energy, and Mangalore Refinery and Petrochemicals have suspended imports. Only Rosneft-backed Nayara Energy is unaffected, as its Vaidinar refinery is already listed as a sanctioned entity and relies primarily on Russian crude.

Analyst Sumit Ritolia says that refiners other than Nayara will not risk purchasing from OFAC-listed companies. Negotiating new contracts, supply routes, ownership structures, and payment channels will take time.