NEW DELHI: Indian refiners are poised to sharply curtail imports of Russian oil to comply with new US sanctions on two top Russian producers, industry sources said on Thursday, potentially removing a major hurdle to a trade deal with the United States.
The change comes as India faces punishing 50 percent tariffs on its exports to the US – with half of those duties in retaliation for Russian oil purchases – and negotiates a potential trade deal that could bring those tariffs in line with Asian peers in exchange for winding down crude imports from Moscow.
India has emerged as the biggest buyer of discounted seaborne Russian crude in the aftermath of Moscow’s 2022 full-scale invasion of Ukraine, importing about 1.7 million barrels per day in the first nine months of this year.
The US sanctions target Lukoil and Rosneft, Russia’s two biggest oil producers.
Privately-owned Reliance Industries, the top Indian buyer of Russian crude, plans to reduce or cease imports of Russian oil, including halting purchases under its large long-term deal with Rosneft, people familiar with the matter said.
“Recalibration of Russian oil imports is ongoing and Reliance will be fully aligned to GOI (Government of India) guidelines,” a Reliance spokesman said in response to a query on whether the company plans to cut its crude imports from Russia.
Indian state refiners including Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are also reviewing their Russian oil trade documents to ensure no supply will be coming directly from Rosneft and Lukoil after the US sanctioned the oil companies, a source with direct knowledge of the matter said on Thursday.
India’s oil ministry and the state refiners did not immediately respond to requests for comment.
“There will be a massive cut. We don’t anticipate it will go to zero immediately as there will be some barrels coming into the market” via intermediaries, a refinery source said, declining to be named as they were not authorised to speak with media.
Wednesday’s sanctions, the first of President Donald Trump’s second term targeting Russia over its actions in Ukraine, come as his frustration grows with Russian President Vladimir Putin.
“If the Trump administration does indeed back today’s words by action, we anticipate that refiners seeking to retain access to US capital markets will forego Russian barrels,” RBC Capital analyst Helima Croft wrote in a note.
