India’s refiners have ceased trading with Russian tankers and companies that are under U.S. sanctions, according to a source in the Indian government who spoke to Reuters on Monday.
Last week, the outgoing U.S. administration imposed its toughest sanctions yet on Russian oil. The sanctions targeted two major Russian oil companies, Gazprom Neft and Surgutneftegas, along with 183 vessels, oil traders, oilfield service providers, insurance companies, and energy officials. This is believed to affect around a quarter of Russia’s shadow fleet.
Despite these sanctions, India expects its crude oil imports from Russia to remain unaffected until March. The sanctioned tankers are allowed to discharge their cargo until then, according to a senior Indian government official who spoke anonymously.
India will also permit the discharge of Russian oil shipments that were booked before the sanctions were imposed on January 10. The official added that India does not expect significant disruptions during this two-month wind-down period.
However, the official also noted that it is too early to predict the full impact of the sanctions. The official mentioned uncertainty about how discounts may evolve and whether any parties would be willing to sell oil below the $60 price cap.
Matt Wright, a lead freight analyst at Kpler, explained in a report on Friday that both India and China typically avoid direct dealings with tankers and entities blacklisted by the U.S. Treasury.
The newly sanctioned tankers were responsible for handling 42% of Russia’s total seaborne crude exports. More than half of this crude went to China, representing about 61% of China’s seaborne imports of Russian oil. India also received a significant portion, with Russian oil making up nearly a third of the country’s total crude imports.
Before the sanctions were imposed, India and China had already begun sourcing more crude from countries other than Russia and Iran. This shift was partly in response to increasing U.S. sanctions on Russia and expectations of a tougher crackdown on Iran’s oil exports under the incoming Trump administration.
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