RUSSIA is already reorganising its oil supply routes to make sure India can continue buying large volumes of discounted crude, despite tighter US sanctions, according to industry analysts.
Since the war in Ukraine began, India has become the world’s second largest buyer of Russian oil. Western sanctions have forced Russia to sell its crude at lower prices, making it cheaper than supplies from the Middle East, the Guardian reported.
Relations between Washington and Delhi have worsened in recent months as US president Donald Trump has pushed India to cut its reliance on Russian oil. He has accused India of helping to fund Russia’s war.
In August, the US imposed a 25 per cent tariff on Indian imports, but India refused to change course, saying its energy policy was a sovereign matter. Trade talks between the two countries have since stalled.
Last week, the US threatened even harsher measures, including tariffs of up to 500 per cent and withdrawal from some India-led global initiatives, over continued purchases of Russian oil.
New US sanctions introduced at the end of November target companies and refineries buying oil from Rosneft and Lukoil, Russia’s two biggest exporters. Data shows India’s Russian oil imports fell from about 1.7 million barrels a day to around 1.2 million barrels a day in December.
However, experts said that the impact may be temporary. Four of India’s seven largest refineries still mainly run on Russian crude. Analysts point to signs that Russia is using new exporters as intermediaries to bypass sanctions.
“It looks like new players are emerging, which is a sign that Russia is already trying to reorganise the supply chain,” Homayoun Falakshahi of Kpler was quoted as saying. He added that Russia would “try to bypass [sanctions] as much as they can”.
Falakshahi said Russian oil could soon return to earlier levels, especially for state-run refiners, as supplies shift away from sanctioned firms. Russian president Vladimir Putin said last month that oil shipments to India would remain “uninterrupted”.
Russian crude is now about $9 to $10 a barrel cheaper than oil from Saudi Arabia or Iraq. “The discount is just too attractive,” said June Goh of Sparta Commodities.
Reliance Industries, India’s largest private refiner, is the main exception. It has stopped buying Russian oil to comply with US and EU sanctions, as Europe is a key export market.
A Reliance spokesperson said the company would only consider oil purchases “in a compliant manner”.
