Russian oil share to dip for Indian Oil as firm secures no purchase since Jan 10 sanctions

Indian Oil is looking for “clean” Russian crude oil in the spot market, which means the entire chain including the supplier, insurance and the tanker should be non-sanctioned.

Indian Oil Corporation Limited (IOCL) sees the share of Russian crude oil in its total import basket declining in the near term on account of the recent sanctions imposed by the outgoing Biden administration, said Chairman A S Sahney.

The refiner is following a “cautious” approach towards lifting oil from Russia and has not finalised any new spot contracts from the country post the January 10 sanctions. Currently, Russian oil accounts for 25-30 percent of Indian Oil’s total oil imports.

“A lot of (Russian) entities have been sanctioned. So, there will be some loss of availability for everybody, not only for India or China, but for the world itself. Total exports from Russia might come down. So, that way we also will be affected marginally,” said Sahney.

Sahney added that Indian Oil is looking for “clean” Russian crude oil in the spot market, which means the entire chain including the supplier, insurance and the tanker should be not under sanctions.

On January 10, the former US President Joe Biden imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegaz, as well as on about 180 tankers shipping Russian oil, in an attempt to curb Moscow’s revenues used to finance the war in Ukraine. The new sanctions are also an attempt to disrupt the shadow fleet of Russia.

The sanctions are expected to result in a decline in share of Russian oil to India. Russia has become the largest crude oil supplier to India since the war broke out between Ukraine and Moscow in 2022. Prior to the war, Moscow accounted for about 0.2 percent of India’s total oil imports, peaking to 40 percent in 2023 and 2024, and currently at around 30 percent.

Energy availability intact

The Indian Oil head remains confident about energy availability for India saying the country sources crude oil from several producers, shielding it from the impact of the sanctions on Russia. To secure oil supply, India has diversified its crude sources as the country now buys oil from 39 countries, as compared to 29 earlier.

“We are still in the process of understanding the repercussions of what is going to happen, but we are very confident that it will not have a very big impact on crude availability for any of Indian refiners. These sanctions will only have marginal impact on crude availability or energy security of the country.”

With Donald Trump announcing increased production from the US, Sahney said the company is optimistic about buying more energy from the US but would prioritise prices. “Indian government has already indicated that we are willing to buy more energy from the US if it is available at a competitive price. Competitive price is the important thing; whoever gives at a competitive price, we will be willing to take energy from there,” added Sahney.

Indian Oil expects crude oil prices to remain in the range of $75-$80 per barrel for the next six months to one year on account of rising supply in the global market.