Indian oil refiners have ceased transactions with Russian firms and tankers that have been sanctioned by the United States. Nevertheless, a government source indicated on January 13 that the Indian government does not foresee significant disruptions in the supply of Russian crude oil during the two-month wind-down period. Recently, the U.S. Treasury enacted sanctions against Russian oil producers Gazprom Neft and Surgutneftegaz, along with insurers Ingosstrakh and Alfastrakhovanie Group. These sanctions also encompassed 183 vessels utilized for transporting Russian oil; however, the U.S. has permitted a wind-down of certain energy-related transactions until March 12. India will permit the unloading of Russian oil cargoes that were booked prior to January 10 at its ports, in accordance with the sanctions. The government source confirmed that vessels already en route will proceed without significant complications.
The official expressed confidence that there would be no major issues in the upcoming two months, as the ships in transit are expected to arrive. It remains premature to assess the long-term effects or the potential for discounts, the official noted, while also suggesting that Russia might offer India greater discounts to comply with the $60 per barrel price cap established by the G7 nations in 2022, which is necessary for utilizing Western tankers and insurance. The Indian government will ensure that transactions involving Russian crude are not associated with sanctioned entities by mandating certificates of origin for the oil. The official emphasized that “Russia will find ways to reach us,” underscoring India’s status as the third-largest oil consumer. Furthermore, Indian refiners are in discussions for contracts for 2025/26 and may consider increasing their purchases from major Middle Eastern oil producers. Indian companies are also assessing the potential ramifications of U.S. sanctions on Russia’s Vostok oil project, in which they hold investments.