After the United States imposed new sanctions on two major Russian oil companies, Indian oil refineries are preparing to sharply reduce imports of Russian oil. Reuters reported this on Thursday, citing sources. This move could help pave the way for a possible trade agreement with the United States.
As a result of the new sanctions, there is now a possibility that the 50 percent tariff imposed on Indian goods in the U.S. may be reduced. Half of those tariffs were introduced as a reaction to India’s purchase of Russian oil. Thus, if India reduces its import of crude oil from Moscow, the tariffs may be lowered to the same level as those on other Asian countries.
Following Russia’s full-scale invasion of Ukraine in 2022, India became the largest buyer of discounted Russian oil transported by sea. In the first nine months of this year, the country imported an average of 1.7 million barrels per day.
The U.S. sanctions target two of Russia’s oil giants — Lukoil and Rosneft. India’s biggest private oil company, Reliance Industries, has announced that it will reduce or completely halt imports of Russian oil. They also plan to suspend their large long-term contract with Rosneft.
A spokesperson for Reliance said that the process of reorganizing Russian oil imports is underway and the company will work in full alignment with the Indian government’s guidelines.
Similarly, the state-owned companies — Indian Oil, Bharat Petroleum, and Hindustan Petroleum — are reviewing their commercial documents to ensure that no direct supplies come from Rosneft or Lukoil. However, India’s Ministry of Petroleum and the state companies have not commented on this matter.
A refinery official said, “We will make substantial cuts. But it won’t drop to zero, because some oil will still enter the market through intermediaries.”
This is the first major sanction imposed against Russia during Donald Trump’s second term. It comes in response to the Trump administration’s growing dissatisfaction with President Putin over the Ukraine issue.
Helima Croft, an analyst at RBC Capital, said that if the Trump administration backs its words with action, refineries seeking access to the U.S. capital market will stop buying Russian oil.
According to guidance from the U.S. Treasury Department, companies have until November 21 to cease transactions with Rosneft and Lukoil.
An Indian official stated that everything depends on the banks — “If banks agree to make payments, purchases will continue; if not, imports will drop to zero.”
Reliance operates the world’s largest refining complex in Jamnagar, located in India’s Gujarat state. The company purchases nearly 500,000 barrels per day from Rosneft. They have recently started buying oil from the Middle East and Brazil as partial alternatives to Russian supply.
Meanwhile, Nayara Energy, another Indian refiner with Rosneft as a stakeholder, also buys Russian oil, but the company has yet to comment.
Trade sources say that state-owned companies generally do not buy oil directly from Rosneft or Lukoil; instead, they procure through intermediaries.
Following the imposition of sanctions on Thursday, global Brent crude oil prices rose more than 3 percent.
