New Delhi: A sudden move by Washington has thrown India’s oil sector into turmoil. State-owned refineries are working around the clock to figure out what happens to their Russian crude supplies after America blacklisted two of Moscow’s biggest oil giants.
The panic started Wednesday when President Trump dropped sanctions on Rosneft and Lukoil, his first serious shot at Russian energy firms since returning to office. Companies worldwide now have a hard deadline: November 21 to completely cut ties with both Russian producers, according to the US Treasury’s announcement.
Four major Indian state refiners Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum, and Mangalore Refinery are now going through shipping paperwork line by line, Reuters learned from people directly involved. Their mission? Make certain no tankers showing up after mid-November carry oil directly from the banned companies.
“Every contract is under the microscope right now,” an insider told Reuters, requesting anonymity given how politically sensitive this has become.
Private Sector Also Feeling the Heat
The situation gets more complicated with India’s private players. Reliance Industries, which buys more Russian oil than anyone else in India, is seriously considering whether to pause or dramatically cut back its purchases, multiple news outlets including Bloomberg and Reuters have confirmed.
Reliance has major commitments with Rosneft of nearly half a million barrels every single day. A company representative gave a carefully worded response to Reuters: “We’re adjusting our Russian oil strategy and will stick to whatever guidelines the Indian government puts out.”
But here’s the thing: nobody expects the taps to shut off overnight. “Some barrels are already on ships headed our way,” one refinery official explained to Reuters. “Those will probably still arrive before the cutoff date.”
The Numbers Tell a Big Story
Just how dependent is India on Russian oil? Data from Kpler, a firm that tracks global energy flows, shows Russia now supplies roughly one-third of all crude India imports. That’s a massive jump from barely 2 percent just three years ago.
What changed? Russia’s war in Ukraine. Western sanctions pushed Moscow to offer India steep discounts. Indian refiners jumped at the chance to buy cheaper fuel, and before long, Russia became India’s number one supplier.
Top executives at Indian refineries told Bloomberg they’re bracing for Russian supplies to essentially disappear. One source speaking to Reuters put it bluntly: expect “massive reductions” in how much Russian crude India brings in.
Markets React Immediately
Wall Street and global commodity traders took notice fast. CNBC tracked Brent crude prices shooting up nearly 4 percent to around $65 per barrel right after Trump’s announcement went public.
Energy experts are calling this a game-changer. Previous Western efforts tried to cap Russian oil prices at $60 per barrel while still allowing sales. These new American rules seem to block Russian crude purchases entirely, no matter the price tag, CNBC’s sources indicated.
John Kilduff from Again Capital told CNBC the message is clear: “It looks like you simply cannot purchase Russian crude anymore, period.”
Where Does India Shop Now?
India will need to look elsewhere, and fast. Kpler’s tracking data reveals Indian refiners already increased American crude imports to about 310,000 barrels daily this year, up from roughly 200,000 last year. October could see that number hit 500,000.
Early 2025 figures show OPEC nations now account for just over half of India’s oil imports, while Russia’s share sits at 36 percent, according to combined tracking from Kpler and Reuters.
Kilduff told CNBC that Middle Eastern suppliers, particularly Saudi Arabia, have extra capacity available. But there’s a catch: “More countries competing for non-Russian oil will definitely push prices higher,” he warned.
Sumit Ritolia, who analyzes refining markets for Kpler, offered a prediction to Indian reporters. If America really turns up the pressure, India might trim 100,000 to 200,000 barrels daily “as a signal we’re diversifying,” but probably won’t make wholesale changes to its supply mix.
Political Tensions Brewing
This whole situation has created awkward diplomatic moments. Trump told reporters on October 15 that Prime Minister Modi promised to stop buying Russian oil. India’s foreign ministry quickly pushed back, saying they had no knowledge of any such agreement, Bloomberg reported.
Adding to the confusion: despite all the talk about cutting back, India’s Russian oil imports actually went up in early October after dropping for three months straight. Tanker tracking showed 1.8 million barrels per day coming in, according to Kpler’s data.
China Faces Similar Dilemma
India isn’t navigating this alone. When Chinese officials held a press briefing Thursday, their foreign ministry spokesperson criticized what he called “one-sided sanctions without international legal backing”, CNBC noted.
Bloomberg’s reporting indicates China National Petroleum Corporation gets Russian oil through pipelines via long-term Rosneft deals, but doesn’t have similar contracts for seaborne shipments.
Ticking Clock
Industry watchers are saying refiners need to comb through every Rosneft and Lukoil-linked contract and finish whatever unwinding is necessary before November 21 hits.
India’s oil ministry hasn’t given companies any official playbook yet, leaving refiners to basically figure this out themselves. When contacted by various media outlets, Indian Oil, Bharat Petroleum, Hindustan Petroleum, and ONGC all stayed silent with no comments provided.
The stakes extend beyond just business. India burns through 4.84 million barrels of oil every day, and imports cover most of that appetite, per 2024 statistics Bloomberg cited.
Losing the Russian discount could mean significantly higher costs for Indian refiners. That expense typically gets passed down to regular Indians filling up at gas stations people already dealing with inflation pressures.
One analyst speaking to Gulf News summed up the situation: “We’re watching a major turning point in how global oil moves around. Indian refiners are caught right in the middle.”
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