Crude oil imports from non-sanctioned Russian entities to India may increase in near term on high discounts, say analysts

The discounts that non-sanctioned Russian entities are offering are nearly as high as $5-$6 per barrel.

India is expected to increase crude oil imports from those Russian energy companies, which are not sanctioned by the United States, in the near term, as they are offering higher discounts, analysts said.

The discounts that non-sanctioned Russian entities are offering are nearly as high as $5-$6 per barrel. Hence, Indian refiners are likely to see an increase in imports from those companies, they say.

According to Prashant Vashisht, Senior Vice President, Icra, India may start importing 0.8-0.9 million barrels per day (Bpd) of crude oil from Russia’s non-sanctioned entities in the coming months.

Russian crude oil shipments to India dropped significantly in November to around 948,000 barrels per day (bpd), nearly 50 percent down from 1.89 million Bpd in October, according to real-time data and analytics firm Kpler. In October, crude oil imports from Russia accounted for about 35 percent of India’s total imports.

Of 1.89 million Bpd imports, India imported close to 1.1-1.2 million Bpd of oil from Rosneft and Lukoil – the two sanctioned entities. Analysts say that all Indian refiners, barring Nayara Energy, have stopped importing crude oil from these two companies almost entirely, post November 21 (the date when US sanctions on kicked in on Rosneft and Lukoil).

Nayara Energy, as per analysts, is still importing about 400,000 Bpd of oil from Russian entities, including from Rosneft. To be sure, Rosneft owns a 49.13% stake in the company.

In October, the US Treasury Department's Office of Foreign Assets Control (OFAC) sanctioned Russia's two largest oil companies to pressure its energy sector and force it to retreat from Ukraine.

The OFAC announcement came with an explicit warning that secondary sanctions—targeting those buyers of Russian crude oil from these companies that continue to do so—could be considered in the near future. This threat is precisely why India, Turkey and China have reduced supplies from Russia.

In an article, on December 2nd, real-time crude oil data-analytics firm Kpler said that “unless more expansive secondary sanctions are introduced, India and China will continue to buy Russian oil.”

“…Russian barrels remain highly cost-competitive, and workarounds to maintain flows are likely to emerge. In particular, buyers may increasingly pivot to non-sanctioned Russian entities and opaque trading channels,” said the article, authored by Johannes Rauball, Senior Crude Oil Analyst at the Kpler.

Rauball says that refiners will likely proceed more cautiously, relying on unsanctioned traders, blended barrels, and more complex logistics to minimise OFAC exposure. “Russian supply will not disappear but will increasingly move through opaque channels.”

Recent tanker activity suggests a notable shift in Russian crude trading behaviour, marked by mid-voyage diversions between India and China and Ship-to-Ship (STS) transfers at unusual locations such as off Mumbai’s coast, far from the typical transfer zones near the Singapore Strait, he added.