Indian Refiners May Cut Russian Crude Purchases After US Sanctions Threat

Indian oil refiners are contemplating a reduction in crude purchases from Russia for November deliveries, following the US enactment of sanctions legislation that could impose additional tariffs on nations buying Russian energy, reported Bloomberg. As the world's third-largest crude importer, India has increasingly relied on Russian oil to keep costs manageable in the face of global supply disruptions.

However, sources familiar with the negotiations assert that major refiners have begun scouring for alternative sources due to concerns over potential US measures.

India has pledged to prioritize energy security and safeguard its trade interests in response to the US House's passage of the Russia sanctions bill. The new legislation enables President Donald Trump to impose tariffs on countries that procure Russian crude. India, which has been among the most significant buyers of Russian seaborne oil, might be impacted if Washington decides to enforce the measures.

Russian crude imports have already decreased, with September imports anticipated to average approximately 1.9 million barrels per day, accounting for over 35% of India’s total crude imports and marking the lowest level since April, according to Kpler data. However, substituting Russian supplies may prove arduous due to the magnitude of purchases and the higher costs of alternative grades.

Russian Urals delivered to India were priced at around $133 a barrel last week, whereas Middle Eastern grades such as Oman and Murban were more expensive. Supply challenges contribute to the uncertainty.

Global crude markets are facing added pressure as Persian Gulf producers strive to resume shipments through the Strait of Hormuz. Meanwhile, India’s oil demand is projected to grow as a new refinery in Rajasthan and enhancements at existing facilities augment crude requirements. Discussions for November Russian crude shipments are expected to commence soon, rendering the subsequent buying cycle crucial for refiners and policymakers.

India is also monitoring whether Washington will apply the proposed measures broadly to major Russian energy consumers, including China.

The legislation permits tariffs of up to 100% on items from major Russian energy buyers, but implementation hinges on US government decisions. India has maintained that its Russian oil purchases are motivated by the necessity to secure affordable energy supplies.