Indian refiners are adjusting their oil supply chains by changing their oil traders, insurers, and vessel owners to keep importing cheaper Russian oil without violating recent U.S. sanctions, according to anonymous industry executives who spoke to Bloomberg.
Following U.S. sanctions on January 10 that targeted dozens of tankers transporting Russian oil to Asia, as well as additional sanctions on traders and networks involved in Russia’s oil trade, India has been searching for ways to continue purchasing Russian oil from companies not blacklisted by the U.S.
India, which imports more than 80% of its daily crude oil needs, is facing higher costs and a reduction in affordable Russian oil. Indian refiners are now avoiding tankers directly sanctioned by the U.S.
India has stated that it will continue to buy Russian oil as long as it is priced below the $60 per barrel cap, shipped on non-sanctioned tankers, and does not involve any sanctioned individuals or companies.
While the supply chain adjustment is underway, it may take time, forcing Indian refiners to purchase more expensive cargoes from other suppliers, at least for shipments scheduled in March and April.
India has received confirmation from the U.S. that the Russian oil tankers sanctioned in January can still discharge their cargoes at Indian ports until February 27.
Though this U.S. clarification provides temporary relief, it remains unclear how future trade will unfold.
Determined to maintain Russian oil imports while staying compliant with sanctions, India is working to reconfigure its supply chain.
Indian Oil Secretary Pankaj Jain addressed the challenges at the India Energy Week conference, explaining that securing non-sanctioned ships, arranging insurance, and processing payments all present obstacles. “We are working on solving these problems,” Jain told Bloomberg.
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